Thursday, 22 October 2009
Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009
Debate resumed from 21 October, on motion by Mr Albanese:
That this bill be now read a second time.
upon which Mr Billson moved by way of amendment:
That all words after “That” be omitted with a view to substituting the following words:‘given Labor’s rash, unjustified and irrational change of policy to force the break-up of Telstra in an arrogant attempt to prop-up its risky $43 billion National Broadband Network, further consideration of this bill should not proceed until after the NBN Implementation Study is presented to the Parliament’.
Last night before the debate was interrupted, I was talking about payphones on an island in my electorate and Telstra’s response. The new universal service arrangements under the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 will also include reliability and repair responsibilities that will ensure that Telstra cannot choose which aspects of the telephone or payphone services it intends to maintain. These measures are consumer focused, as they should be. They will strengthen consumer protection and they will also assist in stopping the freefall of the service quality which so many of the consumers and constituents in my electorate have experienced over the past years.
But this is clearly not the only area in which Telstra is letting consumers down in my home state of Tasmania. I moved a private member’s motion about four weeks ago after hearing from many of my constituents about the $2.20 administration fee that Telstra is charging customers to pay their telephone bill in cash at Australia Post or a Telstra shop. My constituents in my electorate are completely outraged by this move by Telstra. It is certainly not conducive to improving quality service and customer satisfaction. In fact, I have now had people contact my office to say that the $2.20 fee is actually included in the total amount you have to pay. So, if you are paying by other means, you have to deduct this from the total amount given on your bill. Clearly, we are not getting the service that we deserve in Tasmania. I believe the structural separation is really important, as are the consumer protections that are part of this bill.
The structural separation is really important, as I have been saying, regardless of the National Broadband Network to ensure that consumers in my state of Tasmania get improved service quality from what is currently a near monopoly provider. But I do want to talk a bit about the National Broadband Network. I was very pleased when the Prime Minister came to Cambridge in my electorate to lay the first fibre-optic cable of the NBN. In Tasmania, this rollout has already begun in Smithton, Scottsdale and Midway Point, and it is the intention that around 200,000 premises will be connected in Tasmania by the end of 2014 along with all our hospitals and our schools. The Premier and Prime Minister announced just yesterday stage 2 of the rollout, which will be going to places like St Helens, Triabunna, Deloraine, Sorell and George Town. For me, I am really thrilled that a suburb in my electorate, Kingston Beach, is receiving broadband in stage 2, and I know that my constituents in that area will be really thrilled. Also, another suburb of Hobart, South Hobart, which is only three minutes from the city centre, currently does not have reliable access to a broadband service, so I am sure it will be much appreciated there.
The investment of the NBN is a very important step forward in expanding Australia’s telecommunication needs and will obviously be a crucial part of telecommunications in this country going forward. The delivery of high-speed broadband will open up a new window of opportunity and will be a technological advancement that will afford opportunities particularly in the areas of education, health and the delivery of government services. Under this Rudd government initiative every person and business in Australia will have access to affordable fast broadband. This investment will support and stimulate jobs in the short term and the long-term benefits are obviously there for all of us to see.
Tasmania at the moment has got about 39 per cent of broadband for households, and that is much lower than the national average of 52 per cent. That clearly shows that the current system and regulations are not working in Tasmania. The biggest barriers to people wanting to connect to broadband are that in many places they cannot get it connected. People who contact providers are often told that the service is not available in their area. I find that very difficult, particularly when these people live 10 minutes from the city of Hobart. Tasmania’s schools, homes and workplaces will be connected with fibre to the premises delivering speeds of up to 100 megabits per second and, as I said, we will be delivering it to all of our hospitals in Tasmania and 90 per cent of our schools. Rural and remote areas will also receive the benefits of the next generation wireless and satellite technologies. It means that everybody in Tasmania, no matter where they live, will have access to faster broadband. As I said, 200,000 will have fibre to the premises. It is wonderful to see this outcome. As a Tasmanian, I am really pleased that this is occurring.
The telecommunications regulatory reform package represents one of the most significant reforms to the telecommunications regime since open competition was introduced in 1997. Our Premier was asked at the National Press Club yesterday about his thoughts on Telstra’s separation. He said:
I applaud the leadership that Senator Conroy and Prime Minister Rudd have shown in taking the decision to embrace structural reform in telecommunications.
It will allow for a more competitive telecommunications market—one that is inherently more responsive to the needs of consumers in all states big and small.
That is a very welcome development, which supports the action we have been taking over the last ten years to make sure Tasmania was not forever a prisoner of a Telstra monopoly.
I conclude by commending the bill to the House. I am sure it will be a benefit to all Australians but particularly to those people I represent in Tasmania.
I rise in this important debate on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 to support the amendment moved by my colleague the member for Dunkley and to take the opportunity to canvass what has happened over the course of the last couple of years. This policy area of communications, and particularly of broadband, from the Rudd Labor government is a first-class illustration of a broken election promise, of policy incompetence and chaos, and a classic example of where the outer suburbs, regional and remote areas of Australia are being let down.
If I could take the House back to March 2007 when the now Prime Minister, then the Leader of the Opposition, released his New Directions for Communications: A Broadband Future for Australia—Building a National Broadband Network policy to the Australian people, the pledge was to fix broadband black spots with their broadband network plan. In 2007, the coalition government, as it then was, announced and commenced a new plan to fix broadband black spots in outer suburban areas in electorates such as Casey and Dunkley, which my friend and colleague represents. The former government had contracted OPEL to fix these broadband black spots on a case-by-case basis. The contract was signed and today those very areas would have had their black spots fixed, they would have affordable, quality broadband services, but after the election the Minister for Broadband, Communications and the Digital Economy cancelled that contract. In the beginning of 2008 he announced that he was cancelling that contract.
We move forward to April this year when the government, having been in office for nearly 18 months, having considered its election promise, having taken its only action which was to cancel a contract to fix broadband black spots, announced a new broadband plan—their NBN 2 plan. The plan was to spend $43 billion to have a broadband service some time into the future. This is policy and election promise leap-frogging like we have not seen before. The NBN for mainland Australia will commence, or be up and running, in the outer suburban areas of Casey and Dunkley in at best—no-one knows for sure—about eight years time. So, having promised to fix broadband black spots, the only action the government has taken is to cancel the contract that would have fixed in a targeted way those very broadband black spots. The government’s promise now to those people in electorates like mine of Casey is, ‘We could have fixed that broadband black spot, but we have a new and improved product that will deliver broadband services to you in at best’—it is hard to pin them down—‘about eight years time in 2017.’
This is unbelievable betrayal on a grand scale. In eight years time, in 2017, it will be 10 years since the election promise. In 2017 the residents of these areas will have been, on a best case scenario—it will probably be longer—waiting 10 years from Labor’s promise. Worse than that, from now they could have had broadband services if that OPEL contract had been honoured, but for eight years they will be denied them. Residents in Casey in black spot areas in the Lilydale Lakes Estate, the Gateway Estate—also in Lilydale—the Blue Ridge Estate in Mooroolbark and in Monbulk and the Patch could have had broadband services if the government had simply taken no action and had honoured the contract. Many commentators have made the point that the government has done absolutely nothing on communications. The one action that they have taken was to cancel that contract.
The member for Dunkley made a very good contribution at the beginning of this debate in this House. On the cancellation of the OPEL program, he pointed out that schoolkids could be using the technology right now. He said:
They would have started perhaps in year 7 at a secondary school and been able to use broadband to support their education. Now, they will have left secondary school before much of anything happens in terms of improving broadband in their areas.
That hit the nail right on the head.
Recently, I met with a group of residents in the Lilydale Lakes Estate. I met with Doug Stanton and a group of residents who have been denied affordable quality broadband. The former government recognised that this was unacceptable and put in place a contract to provide it, and it would have been provided by now or by the end of this year if the Labor government had simply honoured that contract. For all the rhetoric and all the speakers notes that those opposite will have about a wonderful new NBN, it will be years into the future if it occurs. They are proposing to spend $43 billion without knowing what the take-up rate will be, without knowing what the business case is and without knowing what the price will be.
The promise and the pledge from this Prime Minister and from those opposite is: ‘Forget what we promised at the last election; we are now promising something for two or three elections time.’ It is absolutely scandalous. The promise to the people in the Lilydale Lakes Estate is that they should wait until this supposed Rolls Royce service comes along in 2017. Looking at the point the member for Dunkley made about schoolkids being able to use the internet, the rhetoric from this government is all about trying to give access to the internet to schoolchildren. They talk the talk, but when it comes to it they have taken a deliberate policy decision to deny schoolkids access to the internet in black spot areas that could have been filled and fixed by now.
Like robots, those opposite will get up and attack the former Howard government. I predict that that will occur when I finish my contribution. But I make this prediction also: they will not mention the cancellation of that contract. They will not say to those people living in those areas that it is right that they wait eight years, yet that is exactly what they are doing.
The Prime Minister is like the crazy architect that you see on some of those home-building programs. He is like the crazy architect in Grand Designs. He has the sketch. He has the house being build. The people who want their house built are living in a caravan. And he says: ‘Look, I know I promised you a two-bedroom or three-bedroom house and I know I said I’d build it within six months. But guess what? I’ve been back to the drawing board and I’ve worked out that in eight years time I can build you a mansion. All you’ve got to do is wait and live in the caravan.’ I saw an advertisement for the program Grand Designs last night. They have a new program. They are going to go back to some of these houses that have been constructed and they are going to look at the houses that are leaking or that never quite got finished. This is exactly what this Prime Minister is like: he is like the crazy architect in Grand Designs. But for those people living in broadband black spots, the only promise is to wait for 10 years until 2017.
And what might happen then? What might happen if the NBN rolls out—if the business case has been made; if it actually occurs; if this government manages with a bigger program to do what they could not do with a smaller program; if they manage to actually stick to their promise—is that they will, we are told, get broadband at high speed. But we are not promised that it will be affordable; we are not promised that at all because none of the business case has been done, there has been no detail on what the take-up rate will be, there has been no detail on exactly what the dimensions of the cost will be. So as well as being denied access to affordable broadband for eight years, as the families in the circuit in Lilydale Lakes Estate and surrounding streets and those other black spots have been, when families finally get broadband services they could very well be at a prohibitive cost. Going back to the example of the schoolchildren, by 2017 they will have left school—and that is the price those families are currently paying for Labor incompetence on a grand scale.
Those opposite know that this has been a shemozzle. They went to the last election with a promise to fix broadband black spots. They will go to the next election not having fixed one black spot in electorates like Dunkley or Casey. That is absolutely beyond doubt. And the member opposite, the member for Robertson, is nodding her head.
You are agreeing that you will go to the next election without having fixed a single broadband black spot—that it is unbelievable, but it is absolutely the case. I say this to those opposite: do the right thing; fix broadband black spots in a targeted way; honour your promise. Whilst you can have speaking notes and you can stick to your rhetoric, bag the former government, and call the current Prime Minister ‘decisive’ a pre-scripted 10 times in your speech—although the member who is about to follow me might not stick to the script—I can tell you that the people in the Lilydale Lakes Estate, the Blue Ridge Estate and in black spot areas all over outer suburban Melbourne, from Casey through to Dunkley, know. They heard Kevin Rudd, the Prime Minister, promise that he would fix their black spots. They know that they have not been fixed. No amount of spin from those opposite will conceal the fact that they have not got what they were promised. They have not got it because the government cancelled that contract. They know that they are being denied it by this stubborn government that has demonstrated nothing but policy incompetence.
I have to commend the member for Casey for his valiant attempt to defend the indefensible by arguing that a bandaid, half-hearted solution that did not work was much better than a comprehensive national solution to the issue of high-speed broadband. I have to commend him for his bravery in the face of all the evidence before him. I rise in the House today to speak in support of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. The bill introduces a package of legislative reforms aimed at enhancing competitive outcomes in the Australian telecommunications industry and strengthening consumer safeguards.
The bill has four broad components. Firstly, it addresses Telstra’s extreme level of vertical and horizontal integration within the telecommunications industry by requiring the company to separate either functionally or structurally. I have to say that for all the pounding by the opposition when they were in government, they never had the willingness or the intent to deal with this major problem in our telecommunications industry. Secondly, it streamlines access provisions and reforms the anticompetitive conduct regimes within the telecommunications sector. Thirdly, the bill strengthens consumer protection measures in the industry. Fourthly, the bill reduces red tape and eliminates certain regulations that have become impediments to long-term productivity growth.
The measures contained in this bill will radically transform the telecommunications industry in Australia, fundamentally reshaping both the structure of the industry and the manner by which it is regulated—something the previous government did not have the capacity to do. It will also bring significant benefits to consumers. This ambitious program of reform will prepare the way for the introduction of a national broadband network for Australia—a groundbreaking initiative of immense importance to Australia’s long-term economic and social prosperity. The $43 billion National Broadband Network represents the largest nation-building investment in Australia’s history. Frankly, it is about time the opposition recognised that, got on board and did something and said something positive.
Significantly, when it is established the NBN will be a wholesale-only telecommunications provider operating within an industry run along open access lines. The bill will move today’s telecommunications industry towards a more competitive, open access model in preparation for the NBN. The transition to the NBN will take approximately eight years and the government recognises that fundamental reform of the existing telecommunications regulatory regime is critical to Australia’s successful transition towards its future model. But I really have to restate the obvious: it will not take eight years to have NBN. The NBN is being rolled out progressively, and not one area at a time. Tasmania is very lucky to be the first area. That it is where it started but it will be progressing in a number of areas simultaneously, so many areas will not be waiting the eight years. The eight years is a completion date.
In short, the present arrangements are inadequate for this task and need significant root-and-branch change. The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill before us delivers the first major instalment of these vital reforms. There has been longstanding concern across broad sectors of Australian society that the current system is failing consumers and business. These failings are evident in matters of pricing, quality of services and availability of services. That is evident to everyone, apparently, but the opposition. Affordable, high-quality telecommunications services, including high-speed broadband and reliable telephone capabilities, are critical if Australia’s economy is to grow, produce and innovate.
When the Rudd Labor government announced the introduction of the enhanced National Broadband Network in April 2009, it also announced its commitment to reforming the existing telecommunications regulatory regime. More than 140 submissions were received in response to a discussion paper circulated at the time that canvassed the various options for reform. Submissions were received from all major telecommunications service providers, broadcasters, media companies, state and territory governments, the ACCC, disability and consumer groups, business organisations and unions. Overwhelmingly the submissions supported the idea that the current regime was not serving the best interests of business or consumers and that it needed major reform. The submissions supported reform of Australia’s telecommunications sector, especially to improve competition, strengthen consumer safeguards and reduce red tape. The bill under discussion also takes decisive steps towards achieving these reforms.
The current structure of the Australian telecommunications industry is one of the major impediments to growth, productivity and innovation. The dominant position currently commanded by Telstra is central to the present structure. This dominance has severely limited the development of fair and open competition within the telecommunications market. Telstra is one of the most highly integrated telecommunications companies in the world. It has achieved levels of both vertical and horizontal integration that are unmatched by companies in any other sector of the Australian economy. Telstra owns the only fixed copper network connecting almost every house. It owns the largest hybrid fibre-coaxial cable network as well as the largest mobile network. It also owns a 50 per cent stake in Foxtel, which is Australia’s largest subscription television provider.
Despite more than 10 years of supposedly open competition within the telecommunications industry, Telstra has been able to maintain an extraordinary level of dominance in virtually all aspects of the national market. Past governments and current legislation have failed to promote effective competition within the industry over that decade of missed opportunity, and that was clearly a major failing of the previous government. As a result, Australia has fallen seriously behind other developed economies in terms of the availability, price and quality of its telecommunications services.
Telstra’s high level of vertical integration means it can operate as a wholesaler, carrier and retailer of telecommunications products and services. It also means that it continues to possess inbuilt incentives to favour its own retail businesses and to stifle true and open competition. This bill will enable the government to bring marked reforms to bear on this problem. The government’s goal in the first instance is that Telstra give a voluntary but enforceable undertaking to the ACCC to institute a structural separation of its wholesale from its retail businesses. If Telstra does not choose to give this undertaking to the regulator, the bill gives the government the powers to enforce a functional separation of the company. Functional separation will be achieved through amendments to the Telecommunications Act 1997.
The amendments contained in the present bill will ensure that Telstra conducts its network operations and wholesale functions at arm’s length from the rest of the company. Telstra must also provide equivalent price and non-price terms both to its retail businesses and to non-Telstra wholesale customers. In addition to these requirements, Telstra must ensure that this equivalence of treatment is made transparent to the regulator and to its competitors.
Telstra and its shareholders therefore have the option of choosing the method by which the company achieves a separation of its vertically integrated structures. If the company chooses not to undertake a voluntary structural separation, this bill empowers the government to bring about a functional separation of its wholesale and retail businesses. Structural separation may, but does not have to, include the creation of a new company. Alternatively, Telstra may progressively move its fixed line traffic to the National Broadband Network over time and sell or cease to use its fixed line assets. The government has not predetermined which model Telstra may use to achieve its separation. Whichever model is employed, the ultimate goal of full structural separation will be achieved over time—that is, a wholesale-only network that is not controlled by any single retail entity.
Another element of market dominance that Telstra continues to possess is its high level of horizontal integration across different delivery platforms. The company owns multiple delivery platforms including copper, cable and mobile systems that it runs side by side. Under the new arrangements contained in this bill, Telstra will not be permitted to acquire specific bands of spectrum which could be used for advanced wireless broadband services unless it undertakes certain structural reforms. In short, it must introduce structural separation, divest itself of its hybrid fibre-coaxial cable network and relinquish its interests in Foxtel. These readjustments in the structure of the Australian telecommunications industry will address the market imbalance that Telstra enjoys under the current arrangements and foster strong competition in the industry.
Another major component of the telecommunications legislation amendment bill is the amendments to trade practices regulations that currently apply to the industry. These amendments will also promote competition, increase access to the industry and reduce anticompetitive behaviour. Competitors to established industry players seeking access to the industry have long been frustrated by lengthy legal delays and disputes. For example, from 1997 to mid-May 2009 there were 157 telecommunications access disputes lodged with the ACCC. By contrast, only three access disputes had been notified in other regulated sectors, including the aviation and energy industries.
Under the bill at hand, new arrangements will see the ACCC set price and non-price terms of access for declared services in an access determination that applies to all parties. This will streamline the access process considerably and make it less vulnerable to opportunistic legal and procedural delaying tactics. The days of so-called regulatory gaming, which involves the use of litigious obstruction to delay regulatory outcomes for one’s own benefit, will be numbered under these new rules.
The bill will also remove the right to seek merits review of the ACCC’s regulatory decisions. This approach is being pursued because Telstra has used the regulatory and legal avenues available to frustrate regulatory outcomes and cause uncertainty for its competitors. The ACCC will have powers to issue binding rules of conduct, allowing it to immediately implement remedies for breaches. In addition, it will no longer have to consult with a party before issuing a competition notice, so once again the regulator will be able to act quickly against anticompetitive behaviour in the telecommunications industry.
The bill will also ensure that the new anticompetitive provisions apply to content services supplied by carriers or carriage service providers. This will prevent a dominant provider from using its power in one market to damage a competitor in another. As new technologies move into more and more facets of home, work and business, the telecommunications sector is becoming an increasingly important part of the everyday life of all Australians. The need to protect consumers in the telecommunications industry is accordingly becoming more important over time.
Existing safeguards in this industry—including the universal service obligation, the customer service guarantee and the priority assistance arrangements—have been found by a number of recent reviews to need strengthening if consumers are to be properly safeguarded. The universal service obligation—designed to ensure standard telephone and payphone services are accessible to all Australians—is imprecise and needs updating. There is evidence that standards of service in this regard have been falling for several years, and I am sure any member has constant complaints about access to phones in their own electorate. Telstra will be required, upon request, to supply a basic service at specified standards covering connection, repair, reliability and performance benchmarks. These matters can no longer be left up to the discretion of the provider, in particular Telstra. Similarly, payphones must be supplied according to specified criteria and may be removed only with ACMA agreement. This is an initiative that will be applauded in many communities, including my own. To ensure industry compliance, these universal service obligation benchmarks will be backed up by civil penalties.
The customer service guarantee, which obliges telephone companies to meet minimum performance requirements or pay compensation, will also be reformed using new performance benchmarks. New time frames for connections and repair will be backed by civil penalties, thus reducing the scope for retailers to blame noncompliance on the network providers. In overseeing this new strengthened regulatory regime, ACMA will have powers to issue on-the-spot fines for breaches of the civil penalty provisions. However, in order not to stifle customer choice, existing provisions for exempting certain services from the customer service guarantee will remain but only with the customer’s express agreement. The priority assistance arrangements, which require the highest level of telephone service to be provided to customers with a diagnosed life-threatening medical condition, will be retained.
The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill also contains measures to eliminate unnecessary red tape. These measures will remove additional impediments to long-term productivity growth, streamline certain business practices and provide clarity to consumers. Small carriers—those with revenues less than $25 million—will no longer have to pay an annual carrier licence charge. They will no longer have to contribute to the universal service levy or the national relay service.
Reporting procedures under the customer service guarantee and priority assistance arrangements will be relaxed as long as performance benchmarks are being met. Other unnecessary accounting and operational separation requirements will be repealed once the new regime is in place. The government will also remove the outdated requirement for Telstra to provide internet services with speeds of 19.2 kilobits per second. The Australian broadband guarantee offers broadband speeds of 512 kilobits or more.
The bill before us today will introduce a fundamental restructuring of the Australian telecommunications industry. It prepares the way for a seamless transition towards the wholesale-only, open-access market in Australia’s telecommunications sector. These new arrangement will be a necessary requirement for the introduction of the National Broadband Network. It is vital that the high degree of vertical and horizontal integration now held by Telstra be reformed. This will redress severe market imbalances that have favoured Telstra unfairly in the past and would hinder open access and equitable competition in the future. The measures contained in this bill will reshape the telecommunications sector. They will also reshape our society and our community. They are necessary and a part of the new NBN. I am very proud that this government has taken the steps to bring this about.
It is with pleasure that I rise to make a contribution to the debate on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. I start by congratulating the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, for having the intestinal fortitude to in fact bring a piece of legislation such as this before the House. This is long overdue. In my view, it is correcting a problem that was created some time ago and then encouraged by subsequent governments, so we have had this rolling problem in the sense that the structural separation should have occurred at the start of the privatisation of Telstra process. That did not occur as I think the Howard government and, I would assume, initially the Rudd government may well have found it too difficult to address—and we have had the unscrambling the egg issue brought up time and time again. So I am very pleased that Senator Conroy and the government have taken the opportunity to actually put in place something that is required if we are going to have a real competitive process in telecommunications, particularly in country areas.
We have had a whole range of debates on telecommunications in the last few years. One of those debates took place around the sale of the third tranche of Telstra shares—the full privatisation. At the time, the Howard government was suggesting that one of the reasons for the privatisation was that it would be a way of delivering competition to country areas. Anybody—and I know you are a very eminent country representative, Deputy Speaker Sidebottom—who has lived and worked with country people in recent years would fully recognise that there has not been competition, particularly at the smaller end of the market. Even though I do congratulate Telstra Country Wide, Telstra has been operating a business to make money, not necessarily to deliver services to the small end of the market.
The movement to a national broadband network will, in fact, deliver the most important piece of infrastructure that we will see this century. We quite often talk about roads and railway lines, and they are very important, but high-speed broadband services, particularly for the education and health areas but also for the corporate and personal areas, are going to be the infrastructure which, in country areas particularly, will negate distance as being a disadvantage.
We have lived in a time, in the last century at least, where distance, smallness and remoteness have been disadvantages. We have seen a series of governments move towards concentrating people in more or less a feedlot mentality in our cities. The development of a national broadband network will break that nexus. Where you live will become less relevant to your capacity to do business or to be competitive, or to deliver health and education services to our young people, our families and our elderly. So I am very supportive of this legislation. It is long overdue. I did not think any minister would have the intestinal fortitude to do it.
I see the games being played at the moment in this place and outside this place. I see the arguments of the Telstra shareholders. I would remind people who, all of a sudden, are concerned for Telstra shareholders, particularly in the Liberal Party, that their Prime Minister at the time encouraged the mums and dads to buy Telstra shares at something like $7. Now they are worth less than half that. So to be running the argument that this will lead to a deterioration in the price of Telstra shares, given what has occurred in the past, indicates that this is more about frustrating the government than about trying to put in place a better policy by way of amendment. I will be supporting the legislation. Those who are attempting to delay it may well do country Australia a real disservice.
We are not going to get many opportunities at this very important piece of infrastructure. There have been a few attempts in the past, under the old arrangements, which have failed. The National Party in particular have been led by the nose right through this Telstra debate. If they are led by the nose again and oppose this for reasons of city based interests within the Liberal Party and corporate interests, we may well see a scenario where country Australia misses the opportunity to engage in a true national broadband arrangement.
Recently Senator Conroy came to my electorate and spent some time in Tamworth. It may seem that it was a big day for me and for Senator Conroy, but I congratulate him again—I will only do it twice—because he is the first minister I have seen to come to a public forum where he stood for 2½ hours answering questions from left, right and indifferent on some of the technical issues and the policy issues. Some of the people in the crowd would not have been supporters of the Labor Party and were probably not supporters of Senator Conroy, but they were very impressed with his capacity to deal with people who were asking legitimate questions—there were not many political questions. I thought it was a very good performance by Senator Conroy and I know the people in my electorate did as well.
Out of that meeting I have subsequently formed a small working group made up of an ex Telstra Country Wide regional operative, a man of great knowledge of our region, Alun Davies. With Alun, a fellow called David Jones and the University of New England, the small group will look at what optic cable we have in our area now and what could be put in place or assist in the rollout of the National Broadband Network in the future. That group will be working quietly to put a range of information and evidence together. Part of that may well involve—and we are dealing with Senator Conroy’s office to gain some assistance here—travelling to Tasmania for a couple of days to talk to the people who are rolling out the network down there. For Alun Davies, with his technical knowledge, it will be invaluable to see what is happening there. I would appreciate any assistance from the Tasmanians who are here today.
The broadband network, as I said earlier, is the most important piece of infrastructure that we are likely to see this century. It will need a degree of government intervention for it to come about, particularly in the country areas. The city areas could get by through the competitive forces but the country areas will not. I know that there is argument, again by some of the country representatives, that, with the high-speed broadband that is being delivered, 90 per cent of the population will get up to 100 megabits and 10 per cent of the population, which will be regionally based, will get only 12 megabits. I just reflect, for those who are playing the political game in relation to this legislation, that 12 megabits was the top end of the coalition’s ambitions for speed delivery—not just to country people but to all of us. Hence, there is a vast difference here.
I would be the first to say that it would be nice for every constituent in my electorate to have not fibre to the node but fibre to the house. There has been a lot of criticism of the potential $43 billion cost of the current program. I think that cost will come down when we ascertain the infrastructure that Telstra and other telecommunications companies—as well as non-telecommunications companies—have put in place. Once we ascertain what fibre the nation has, the cost may well be significantly reduced. Obviously, we will not know that until we roll the company together—hopefully, with Telstra’s cooperation. We need them and others to come together in a cooperative way to deliver a wholesale network that everybody can be involved in, including the government.
The full privatisation of Telstra has proven that some degree of government involvement is needed for regulatory arrangements and active participation, particularly for country people, because the competitive processes will not take care of the delivery of those services at the small end of the market. We were given an assurance at the time the legislation for the sale of Telstra was going through the Senate. I remember it vividly, and I think I have mentioned it in this parliament once or twice before. I had heard that the then President of the National Farmers Federation, Peter Corish, was going to hold a press conference at the Senate doors late one afternoon. Prior to that, there had been activity, particularly in relation to Senator Joyce, with the Liberal Party trying to convince him that everything would be okay and that country people would be well looked after. They said: ‘Don’t worry about it. Remove government from it and competition between the various players will deliver the services to the country towns.’ We know that that has not happened, and it was never going to happen at the time. But, at that particular time, an assurance was given by the Howard government to Senator Joyce and to Peter Corish, the then President of the National Farmers Federation, that there would be an absolute guarantee enshrined in the legislation for equity of access to broadband and telephone services. That was to be in the Telstra sale legislation. And they—Senator Joyce and Peter Corish—apparently had been told that there was a letter to that effect. No letter has ever been sighted. The legislation never incorporated that enshrinement. And life went on.
I believe Senator Joyce has since recognised the folly of his ways and that he was conned at that time by the Liberal Party. I think it is time for Senator Joyce to reconsider his position on the passage of this legislation and not be conned by the Liberal Party again. Country people will not get many opportunities to have a system such as this. I recognise that some people will have to operate with wireless at 12 megabits or with satellite in the very remote areas, but our major centres—such as Tamworth, Armidale, Inverell and also much smaller towns—where our key health delivery and key educational services are will benefit from 100 megabits per second broadband speed. It is those areas that will actually drive the country economies. If we can deliver some of these educational services—and we probably do not even comprehend many of them yet—and put world specialists in the operating theatres to give information and assistance through real-time, high-speed service delivery, it will be an incredible breakthrough not only for government cost but also in health delivery to country people.
I urge Senator Joyce, and particularly some of the National Party and Country Liberals who have been rambling on about this great problem that the Telstra shareholders are going to have and the great injustice that the government is perpetrating upon them, to recognise that there has always been some degree of regulation from government, even in a fully privatised operation. I do not see this legislation as a sinister socialist takeover of a corporate giant at all, which some people are suggesting—
Why not? I do not see that as an issue at all here. What I see as an issue is that we have an opportunity to put in place a system that can really put this country upfront and we are having these sideline political debates to try and delay it. Some people are suggesting that this does need to be delayed whilst the government’s $25 million implementation plan is put together. That has nothing to do with this bill. Some people are saying, ‘Let’s wait; let’s wait; let’s wait.’ It has nothing to do with this particular piece of legislation. What that will do is allow Telstra, and the camp followers who are in this building, to work a lather of sweat up into a campaign, some of which involves the shareholders, some of which involves this so-called ‘socialist’ policy they can see taking over the corporate sector. Telstra have had plenty of opportunities to be involved in the service delivery end of the business, particularly, in the electorate I represent, in the smaller communities. They know that they have had that monopoly power to keep others out of some sectors of the business area as well. So I would encourage country members in particular to think about their constituents in relation to this and put aside the politics of ‘the Labor Party is bringing in a scheme that is going to revolutionise broadband communications’.
The National Party, I am told, have been told by Senator Minchin and others that this particular bill reduces the universal service obligation. Talking to some people who should know, I am being told that the bill actually strengthens it. Those who are suggesting that it weakens it are going to have to articulate that position. Maybe the shadow minister will articulate where it is actually weakened. But I think anybody who has followed the debate in the past would fully recognise that Telstra, being the monopoly player, particularly in country areas, even though there was a degree of regulation virtually wrote their own USO. If I am incorrect there, I am quite willing to apologise to anyone I have offended. Someone might indicate that that was not the case. What this bill actually allows is the public, through their elected officials, to dictate the universal service obligation—not the monopoly corporate player. I think that is a significant benefit as well.
In conclusion, I think it is time that all country members stood up and supported this legislation. If this runs into the second half of next year and gets embroiled in the election period again we run the risk of missing the opportunity to have these services rolled out. I know there are some bits and pieces that do need tidying up, but I think we really need to get behind the process to have the National Broadband Network rolled out right across Australia.
It is a really great pleasure to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. I think it is a landmark bill, along with a range of other bills in relation to telecommunications, particularly in the area of competition and consumer safeguards, which is what this bill is about. As the previous speaker said, and as I am sure many other speakers will say, this has been a long time coming. It is about righting the wrongs of the past. It is about making good what ought to be in the marketplace for consumers today but has not happened because of a range of mistakes made by former governments.
It does take a lot of courage, a lot of will, to deal with these types of issues, because they are massive issues. They involve massive amounts of taxpayers’ dollars—into the many billions—and they involve dealing with some complex issues which are, as I said, costly but also very time consuming. They will take many years to correct. Nonetheless, it remains exceptionally important that we deal with those issues and that we do it as quickly as we can. I think this bill is as important as bills in any infrastructure area, be it roads, rail, ports—those vital pieces of infrastructure that drive our economy. Telecommunications is at the core of all of those. It is at the beating heart of our economy and the way that people interact and deal with each other on a day-to-day basis, be it on personal or business grounds, or in the context of health or education issues. There are a whole range of areas where people use telecommunications. So it is exceptionally important that this bill is here. It does tackle all of those very difficult issues.
The reality is that none of the difficulties, none of the problems that exist today, can be fixed without a government that is prepared to intervene, without a government that is prepared to tackle the difficult issues and to make the changes and reforms happen. We know from experience, from what we read in the papers and from comments by Telstra executives that it just will not happen without the hand of government—and that is what these bills are about. This government intends to make sure that the two great priorities in telecommunications—an open competitive market with fair competition, and innovative services that drive the economy—exist and that ordinary consumers are protected along the way and have competitive access to a range of services. We are ensuring that that takes place.
I want to get into the general discussions about the long road that has taken us to this point today. The road to developing a National Broadband Network, to delivering what is a critical piece of infrastructure for all of Australia, started a long time ago. But, since we were elected to government in 2007, Minister Conroy has taken the responsibility to actually deal with this and create a bill that will make this happen, which is taking place now. The Rudd government’s commitment has not wavered on this issue. If anything, we have been forced into a situation which leads us to today.
On 7 April this year the government outlined its commitment to roll out the National Broadband Network as a wholesale-only, open-access network that will drive more effective competition in the telecommunications sector. We know this because of the extensive consultations we have had with the sector. We know that it will lead to better outcomes for consumers and for business.
With that said, the transition is of course a critical period, particularly during the full rollout of the National Broadband Network, which will take some eight years, which is a long time. It is a long time by government standards and it is a long time in the sense that most governments only deal with the short time period of one term—a 2½- to three-year period. I always see it as courageous that a government actually tackles issues that span multiple parliamentary terms. It is very much in line with the view that we had in opposition, and it is certainly the view that I continue to have, that good governments plan for the long-term and make long-term decisions about the future of the economy and for consumers.
On 7 April the government announced its commitment to reforming the existing telecommunications regulatory regime. A discussion paper was released to allow for a full consultation process. The issues were similar to those raised in 2008, which saw over 80 submissions received. There was a very strong response in the most recent discussion paper, with 140 submissions received from a broad range of stakeholders pretty much covering the whole sector—the states, the territories, government, broadcasters, media companies, the ACCC, consumer groups, disability groups, business organisations, unions and consumers. There was a large variety of people making submissions and it covered the whole community, and their submissions are of course available.
After consulting for over 15 months and having received in total more than 200 submissions there was an overwhelming message that came through from every submitter and that is that the current regime simply does not deliver in this era. It falls down in a whole range of areas and that is why the government is now developing its package of reform bills. The reforms in the bill that we are currently discussing, and the process itself, are broadly consistent with the overwhelming majority of submissions, having also received extensive and detailed advice from the ACCC.
This issue has been around for a very long time. Most people will agree that structural separation, the separation between the wholesale and retail arms of Telstra, is very important and probably should have been dealt with right at the beginning. But perhaps because of the difficulties or the lack of will, or maybe the lack of foresight from the previous government, 12 years elapsed, which actually entrenched the current problems and the situation that we face today making it harder and harder and harder.
We hear interjections from members of the National Party and they say, ‘Well, we sold it off.’ If they are saying that they sold it off as some sort of cry that that was a solution, then that is far from the case. That certainly was not a solution. In fact, if anything, it entrenched deeper and deeper the problems that existed in this country about a fair, open and competitive marketplace. Given that what was sold off is not only the largest carrier in the country but enjoys an incredible monopoly, it has to be heavily regulated to control its activities and its anticompetitive behaviour. It has also meant that consumers in Australia endure some of the lowest standards in the world in the OECD and developed countries, in terms of broadband provision and in terms of telephony services, and some of the highest costs around the globe. I will have a bit to say about the National Party and the Liberal Party and some of their past behaviour in this area—as well as some of their current behaviour, which is par for the course when it comes to the LNP.
The reality for Telstra is that it is not only a vertically integrated organisation but also a horizontally integrated organisation. It owns all of the fixed copper lines—the network that spans right across the country and literally feeds to every home, business and person who uses telecommunications services—as well as having the largest hybrid fibre/coaxial-cable and mobile networks. On top of that it also has a 50 per cent stake in Australia’s largest subscription provider, Foxtel. It is not unusual in other areas—be it media, television or other areas—for there to be rules around one player owning too much of a particular sector. They are there for a good reason: it is about competition. Consumers inherently understand that, if one big player owns the lot, there is no competition. We see this in the debate around fuel and in the debate around grocery and food prices. We see this debate in many areas, and the debate is no different in telecommunications. The government is being forced to intervene—to act—although Telstra does have options where it can deal with some of these issues. But, to date at least, it is choosing not to do that.
I heard earlier from one of the opposition speakers about the complaint that it will take eight years and that that is somehow too long. I do not know whether eight years is too long, too short or just right, but I do not think the fact that it will take eight years to complete the National Broadband Network rollout is as important as it is that we actually start today—that we have a start date. It is important that we begin the process because for every day that it is delayed there is no rollout. The reality is that these guys sitting in opposition—and we are going to hear from the member for Maranoa shortly about his complaints and opposition to these bills and all the reforms in the National Broadband Network rollout—had the opportunity, the time and the resources to actually do something. For 12 years they sat on the government benches and did very little or nothing. They complain now that they might have changed some of the policies they had in place and that, if they had just been allowed one more term by the electorate, they would have finally done something. Well, isn’t it always the case? ‘Just give me one more term.’ So they would have had 15 years to maybe finally do something.
The reality is that we are not going to take 15 years; we are going to act right now. As we heard from the member for New England, it takes courage for a minister to step into this debate and make it happen. It takes courage on a whole range of fronts, but it must be done. I think the community really do understand this. They actually have a grasp of it. And why is that? Why do the community understand this? Because for the past decade at least they have realised that they have been getting a lower standard of service, they have realised that they have been paying too much and they have understood that Telstra, as the largest player on the block, has not delivered for them. And nowhere did they understand this better than in the bush. I see the member for Maranoa scoffing and laughing but—
The member for Maranoa will get his opportunity. I know he is pretty sensitive on these issues, because it is his constituents who are telling him that he is wrong. The reality for the member for Maranoa and others like him is that they have delivered very little to nothing for their constituents. And here we see them again. What do they actually do? I do not mean the rhetoric that we will hear, but what do they actually do? In 12 years, there was no delivery. In 12 years, there was nothing. In 12 years, all they did was just sell off Telstra. Now that there is a government with the courage to actually do something, what do the opposition do? They say their plan is to just delay it and block it. That is their plan. They do not want to see any delivery—no national broadband network rollout and no increase in competition. Their myopic view on these issues is to just continue to delay. It actually makes sense for them to delay. If you think about it, that is what they did for 12 years—they just delayed. They always put it off for another day: ‘It’ll be right; someone will fix it eventually.’
That someone is here today and is the Rudd government. It has only taken us two years, 24 months, to get to the position where we actually have legislation in the House. So here is an opportunity for the National Party and an opportunity for the Liberal Party. Here is an opportunity for the opposition to show leadership, some courage, and actually get on with the program, get on with rolling out a national broadband network to the country and get this in place. But no, their plan is quite simple and it is well documented, depending on which leader of the National Party you listen to. Clearly they are all of the view that blocking is the best policy. So I would be very interested to see how they go out to their electorates and talk to their country constituents about how they would get better services and better competition and how they would be able to get reasonable prices and access and how smaller businesses and other organisations in the telecommunications marketplace can gain fair and equitable access to market share. I would be interested to see how they work to resolve all those issues together and explain them to their constituents. I doubt that that will happen. They will just blame the government for the failings of the past when in fact they should recognise their failures over a very long period.
It is pretty easy to sum up this issue in a couple of terms. One is to ask who the winners are. Who is going to win out of this change? That is pretty easy: it is going to be the consumers. We have about 21 million people in Australia. So who wins? About 21 million people.
We are getting close to 22 million, yes. If we hit that, it is even better. It strengthens my argument, so I thank the member for that. There will be even more winners. I acknowledge the member for Maranoa for agreeing that there will be more winners. There will be 22 million winners instead of 21 million. It is a great outcome.
Who else wins in this rollout of a national broadband network? Competition wins. When competition wins, people win. Who else wins? The marketplace wins. There will be more access and better opportunity for a whole range of people in the market. Who else wins? Innovation wins—innovation technology. With more players, more access and a better ability for people to share information, innovation becomes centre stage more and more in what can be delivered. Of course, the greatest winners of all are the Australian economy and the taxpayer. Taxpayers will finally be able to have a system that will deliver for them and a system that will deliver for the economy. In all of these debates it does not matter how real the facts are. We see it in a whole range of areas, particularly when we talk about climate change, the Carbon Pollution Reduction Scheme or the emissions trading scheme.
There will always be the sceptics, the naysayers or those who simply want to oppose things because they are in opposition. It is not much different in this debate over telecommunications. You have the sceptics and you have those who say, ‘It’s just not good enough.’ Of course, for those who say that, nothing ever is. When they are there they do not do anything, but as soon as somebody else steps up to the plate it is never good enough. There are the naysayers who will say no to absolutely everything. If it is not their idea, then it is not a good idea. We see those in the National Party as well as in the Liberal Party. Then there are those who are just missing in action. Who are the greatest ones for being missing in action? Those in the National Party. Who stands up for the people the National Party are supposed to represent—farmers, rural folk, bush folk, people out in the country who we all acknowledge do it tough and do not have the sort of service delivery that they should have? No-one in the party room in Canberra does. In the opposition party room, or what was then the Howard government party room, who stood up for the bush? The National Party members are pretty tough in here, but they were never tough in the party room, and they are certainly not tough when they go out into their electorates. We have plenty of evidence of that, so there is no need to debate that.
Who should be supporting this sort of legislation? That is pretty easy. I have mentioned this before. I think it is all those consumers who have a lot to gain out of this rollout—and they are supporting it. As I said, there are just a couple of barriers preventing really good reforms in competition, to opening up the telecommunications market and in having Telstra either functionally or structurally separate, and that barrier is the Liberal and National parties in Canberra. They are too focused on the past. They are more focused on their own image than on actually delivering. Perhaps they are just a little bit ashamed when they think back to their legacy, when they think back to what opportunities were missed and when they think back to all the things they could have done and what they did not do. There is probably some regret now. You can sense it in their tone of voice when they say, ‘We had contracts in place—
An incident having occurred in the gallery—
I see people in the gallery agree with me!
They are crying out for the National Broadband Network! People everywhere are crying out. But I will tell you what they are really crying about in the bush. They are crying about not getting the sorts of services that they deserve and about being misled for 12 years, being betrayed, by the National Party and the Howard government. The coalition could have delivered something for them, but they will complain in this place that it takes too long or that we somehow cancelled some contracts or things that were in place. Isn’t it always the case that they are going to do something? They were always ‘gonna do this’; they were always ‘gonna do that’. But in the end people in the bush missed out—at least, they did then. But now we have a government in place with the courage and the fortitude to deliver this and make this happen. We will not back down. We will make sure it happens, one way or the other, through either the structural separation or functional separation of Telstra. It is up to Telstra to decide. They have some choice, some options. In the end, the winners will be the consumers and the Australian economy.
Having listened to the previous contribution, I am amazed that someone who represents some rural areas around the fringes of Brisbane can speak so supportively of this legislation. With so many shareholders’ and superannuants’ shares and dividends at risk, I am at a loss when I hear contributions like that of the member for Oxley.
In speaking on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, I support the amendments that have been put forward by the opposition. I want to put the words on the public record again:
… given Labor’s rash, unjustified and irrational change of policy to force the break-up of Telstra in an arrogant attempt to prop-up its risky $43 billion National Broadband Network, further consideration of this bill should not proceed until after the NBN Implementation Study is presented to the Parliament …
The opposition is asking for consideration of this bill to be delayed until the study that this government has commissioned is brought before the parliament so that we can consider it in the light of that report. Rushing through this legislation with blinkers on is so typical of this Labor government. We saw the same approach with the emissions trading scheme bill that was introduced into the House this morning. The coalition and many Australians believe the most sensible course of action on the emissions trading scheme, if I can touch on that for a moment, would be to wait until Copenhagen, which is at the end of the year, about 10 short weeks away, to see what the rest of the world is doing. But this government is blindly charging on with that legislation, so it is not surprising that they want to charge on with this legislation as well.
This bill, in essence, demands the functional separation of Telstra. If Telstra does not voluntarily separate, this legislation can force it to do so. That sounds like legislation we might have seen in the former Soviet Union. It is a socialist way of dealing with a public company: ‘If you won’t do as we want, we’ll force you via legislation.’ It is a publicly listed company with shareholders across Australia, including Australian taxpayers through the Future Fund. We know what the Future Fund directors have said that they are very concerned about this legislation because they have a fiduciary responsibility to taxpayers in the administration of that fund. This government wants to force Telstra, if they will not do it voluntarily, to functionally separate its wholesale and retail divisions. The Labor government is also saying that, unless Telstra undergoes this structural separation and divests its hybrid fibre/coaxial cable network and its interest in Foxtel then it cannot acquire a specific brand of spectrum, which is a key factor in the exciting future of advanced wireless broadband. So they have not brought in a little stick; they have brought in a huge sledgehammer.
Interestingly, the Rudd government were not given an election mandate to force the functional separation of Telstra. In 2007, prior to the federal election, the policy they took to the Australian people stated:
Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within the company …
They said that to the people less than two years ago. It is quite clear: ‘Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within the company.’ That was a policy before the election. Now we have another policy. So what people voted for, what they saw in the Christmas election commitments document that came to them in the mail, is not what the government are going to deliver.
They also went to the Australian people promising to bring fast internet to every man and his dog. Everyone was going to be able to get this. And yet we are still waiting for this internet revolution. NBN mark 1 was a complete waste of time and money and now the Rudd government is spending some $25 million on consultants to tell them how to put together their $42 billion National Broadband Network. They are down in Tasmania allegedly rolling out more optic-fibre cable as part of the NBN. At the same time, the government have commissioned McKinsey, at a cost of $25 million to the Australian taxpayer, to tell them how to put this business case together.
I wonder if these consultants have told the Minister for Broadband, Communications and the Digital Economy that, in order for his new government run network, Telstra 2, to work and be viable, he will have to make sure that Telstra 1 is not a threat. The previous coalition government was able to make a successful exit from running a telecommunications company. We let the market decide Telstra’s success, but now this government is proposing to re-enter the business. This government wants to take taxpayers’ money and gamble it all on a new network which may not even be viable. Why are people going to switch to Telstra 2 when Telstra 1 is cheaper and better? It is simple: you make sure that Telstra 1 is not cheaper and better. If this government succeeds in forcing the closure of the existing copper network, then it can essentially eliminate competition against the NBN. That seems to be the push behind this legislation.
There are a number of Telstra customers who have not been entirely happy with Telstra over the past few years, particularly with the switchover from CDMA to the Next G network—and I was one of those people. But there have been relatively few problems with Telstra, considering they provide the majority of rural Australians with their telecommunication services—and I should know because I represent a very large area of Queensland which is very dependent on good, affordable, reliable communications. I certainly take this opportunity to commend Telstra Country Wide. The member for Oxley suggested we did nothing in government. Telstra Country Wide is a great success and was an initiative of the coalition government to ensure that Telstra had a physical presence in rural Australia. In the Hawke-Keating era, Labor were quite happy to see Telstra under pressure from competition to move further and further into the cities and establish call centres as part of the service obligation. We as the coalition government were not happy with that and implemented a process whereby Telstra Country Wide had to have a physical presence and a country division of Telstra to look after country areas of Australia.
My local Telstra Country Wide provide outstanding service, particularly in Roma, Longreach and Toowoomba. Once again they have that physical presence for the people of Maranoa in outback Queensland. Our local area general manager, Jeff Little, who has since retired, was a godsend. I am being truly honest when I say he worked so hard for the people of Maranoa regardless of whether they were Telstra customers, Optus customers, Dodo customers or Vodafone customers. He has since retired and I hope he is having a few well-deserved sleep-ins, because he worked tirelessly, I can assure you. He was a physical presence with the office out there, visiting these communities and customers and attending community events. Of course, his successor, Matthew Mocatta, is also a dedicated person. He personifies the new Telstra approach of collaboration and quality customer service. We are lucky to have such a dedicated Telstra Country Wide team in our part of Queensland. Needless to say, I hope this strong working relationship continues. We have had no commitment from the minister yet, but I would certainly be interested to hear what he has to say about Telstra Country Wide’s future, just as I am sure Telstra Country Wide staff and Telstra’s 30,000 employees would be interested to know if they have a future under this government. And I am sure the nine million customers are also wondering what it will mean for their services if this legislation passes.
I am quite confident in saying that Telstra’s 1.4 million shareholders are not too impressed with this legislation. We have read the articles; I have received the emails. They have every right to be angry. These are Australians who bought Telstra shares in good faith in the three tranches of the Telstra sale or have taken a stake in Telstra through their superannuation investments. These are mum and dad shareholders. Many of these people would have voted for this Labor government based on its policy commitment, given before the election, that there would not be a forced separation of Telstra. These people continued to invest in Telstra. These are people who naively thought that investing in a publicly listed company meant that it was certainly free from government interference. They thought wrongly and they have every right to feel deceived by this government’s attack on their little nest egg—the shares that they hold or the superannuation that will provide for, or is currently providing for, their retirement.
In what other democratic country would this be acceptable? In what other Western civilisation can a government decide to fundamentally change the structure of a company that has done nothing wrong except to be highly successful in what it does? They might have done it in the old Soviet Union; it might happen in the Soviet states. I hope we are not going in that direction with this government.
Imagine how foreign investors are looking at Australia now. If Telstra’s entire structure—its entire make-up—is at the whim of a government, imagine what else could be in its path. What would investors around the world considering investing in Australian publicly listed companies be thinking if this legislation passes and allows this government to force a publicly listed company to split its operations into wholesale and retail divisions? What is the minister going to tell the 1.4 million Telstra shareholders? What will happen to their dividends and the value of their share portfolios? Can the minister tell these shareholders and these superannuants whether their shares will go up or down? Will their dividends increase or decrease? In a recent interview the minister suggested that there might be some impact on share value and on earnings. ‘Might’ is not good enough if you are a superannuant out there or you have invested in Telstra as part of your portfolio or an investment strategy. This is just not good enough. It creates so much uncertainty for people out there who have, in good faith, invested in Telstra for their families or their own retirement and their own security. We are just not getting answers from the minister.
The government have made no significant move in telecommunications since being elected. No wonder they are trying to rush this legislation through—so that sometime later next year, when they will probably bring out their ‘first 1,000 days’ report, they can have something to say about communications. Of course, this government have done little for rural and regional telecommunications. As soon as they were elected to government they wasted little time in gutting the Communications Fund and the Future Fund. That was $2 billion that the coalition put aside to ensure that there were earnings that would provide money without having to go back to taxpayers or Treasury to fix the problem when there was a market failure in communications in rural and remote parts of Australia. That Communications Fund has been gutted by this government; it has been raided. They did not tell the people of Australia that they would do that.
In July the minister announced six priority regions for the rollout of optic-fibre cable as part of the NBN network. Tenders were called—I have his press release here—in July with the expectation of construction beginning in September. Well, I am not quite sure which September he meant. The way I read the press release was that it was a priority and he was getting on with the job—that by September this year the contracts would be awarded and construction would begin in September of 2009. Well, September has passed. Maybe he meant 2010, or 2011 or 2012. I am not quite sure. We are still waiting for the announcement of the successful tenderers.
I am a believer in the use of optic-fibre cable. It is a modern technology. It is the technology that is going to form the backbone of the nation’s network long into the future. I hope that the minister will announce the tenders very soon, because the backhaul fibre will have tremendous benefits for western Queensland, as he said in his press release. He mentioned the towns of Emerald and Longreach in Queensland. I think those communities had an expectation that by September they might have heard that this construction would start in their communities. The backhaul optic-fibre cable will have benefits for the people of western Queensland. I made a submission to the National Broadband Network: Backhaul Black spots Initiative. I called for the optic-fibre cable to run loops in far western Queensland towns where the market will always fail to provide optic-fibre connections. The towns of Birdsville, Bedourie, Boulia, Windorah, Betoota, Quilpie, Eromanga, Stonehenge, Jundah, Yaraka, Isisford, Emmet, Barcaldine, Muttaburra, Aramac, Winton, Cloncurry, Kynuna, McKinlay, Mount Isa and Longreach will all be connected, in a spider-like web, with optic fibre. These interconnecting links between these towns would mean that, if one of the links failed, then it would have a loop back the other way.
The optic-fibre cable would bring huge benefits to large properties and huge benefits to small businesses, tourist centres and outback tourism. You, Mr Deputy Speaker, have worked out in that part of the world and would know what it would mean to the people who live and earn a living in those communities. If we had optic-fibre links and loops through that part of western Queensland it would also allow the Royal Flying Doctor Service, that great mantle of safety for the people of outback Australia wherever they live or wherever they have come from, to take advantage of high-definition diagnostic capability. In this harsh time of drought, when many farmers and their families are feeling isolated and alone, having fast internet would certainly give them tremendous access to friends both close and afar.
Those communities are connected in many ways, such as by satellite, by single-channel radio or microwave links, but these are technologies of the past. Maybe there is a back-up future for them, but they are not the technology of the future. They have served those communities well but, as far as I am concerned, they will not serve them well into the future. In fact, when it comes to service, until about 1984 the community in Birdsville, in the Diamantina shire, did not even have a telephone service. It was the community themselves and the local Diamantina Shire Council that raised the money to put in the telephone service for their community through the Royal Flying Doctor network. When it comes to where markets fail, they fail out there all right, and people in that situation had to come forward and put up their own money to bring a telephone service to that community. That was back in 1983, when major cities and regional centres all around Australia not only had telephones but had automatic telephones.
So, when I talk about markets failing and the need for this optic-fibre cable in that part of remote Australia, it will bring huge benefits to them. Markets will fail, but this is a role for government to provide when markets fail. That is why I hope that, in relation to the black spots backhaul money, the minister will very soon announce the successful tenderer so we can start to roll that out into those remote communities around the back of my electorate and in the Kennedy electorate and up through the Northern Territory, South Australia and Western Australia.
Another thing I want to say is that, when we do build and extend the optic-fibre network, we should be building from the outside to the inside—in other words, from the outback into the cities, not from the cities to the outback. I am concerned that the minister has already stated that, under the NBN mark 2, populations of 1,000 people or less will be bypassed and not connected to the optic-fibre network. I hope he is wrong; otherwise, as you leave Brisbane and get to Ipswich and Toowoomba, they would have a big sign up that reads: ‘When you come to a community of 1,000 people or less, Labor is bypassing you with optic-fibre cable.’ The government are suggesting that communities of 1,000 people or less will not get access to this optic-fibre cable under the NBN proposition. Even the Labor Premier of Queensland has rejected the approach by this government in relation to those smaller communities and will not accept a proposition like that. And I hope the minister will soon respond to the Glasson Review in relation to the $300 million that has not been committed.
If the member for Maranoa thinks that Australia has a truly competitive telecommunications system, then I suggest that he must be living on another planet. No other industry in Australia, member for Maranoa and others in this place, is so dominated by one player as the telco industry and Telstra is one of the most dominant telcos within OECD countries. The self-regulatory regime has failed to foster real competition in the market and those opposite know it. Telstra has been able to use the regime to its advantage. That is a fact. Listening to the member for Maranoa, you would think that Telstra was the most benevolent telco that it was ever possible to have in Australia. Coming from regional Australia, I can tell you that that is not the case. We do not have genuine competition in this country. The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 goes towards helping that happen. And it is about time.
I know that those opposite know this to be true as well. But instead, like with most of our fundamental legislation to update to a modern economy in Australia, those opposite want to sit on their hands and delay purely and simply for point-scoring and ideological reasons. Their response to this legislation demonstrates that even more categorically.
Today I hope to add to the debate on what is a very important bill to this government and to the nation as a whole. It relates to something that we all regard as important. It is as simple as our ability to communicate via a competitive, fair and effective telecommunications framework. The essence of this legislation is about competition. A competitive telecommunications sector is vital to Australia clawing its way back towards the front in the telecommunications pack in international terms. We are way behind and we have been way behind for a long time. It also contributes to the social fabric, allowing friends and families to communicate with each other in many varied ways because of the rapid changes in technology that we see today.
In tandem with the Rudd government’s bold move to establish the National Broadband Network, it is also moving to create a level playing field for telecommunications through this bill. I am very pleased—as no doubt you are in your representation of Lyons, Deputy Speaker Adams—that Tasmania is the first rollout point of the National Broadband Network, and in particular one of my home towns, Smithton. From the outset, it is obvious that the bill is directly aimed at the prize position that Telstra occupies in the Australian telecommunications landscape. It is widely accepted that Telstra dominates the industry and it is very hard to find any other telco sector throughout the world where one company is so completely in control.
In an attempt to overcome the restrictions created by the dominance of one player in the market, the Rudd Labor government has acted. If passed, this safeguards package will represent the most significant reform to the telecommunications regime since open competition was introduced in 1997. Over 12 years have passed since that time and many stones have been cast by a number of smaller operators, but the goliath that is Telstra has failed to be felled or even dented by its competitors. Telstra remains one of the most integrated telecommunications companies in the world. It owns the only fixed line copper network in Australia, a network that connects almost every home and business, as well as the largest hybrid fibre-coaxial cable and mobile networks. It also has a 50 per cent share of Foxtel. This may be less of an issue in geographically smaller countries. But to duplicate even parts of Telstra’s network today would be an undertaking too huge to contemplate.
It is not hard to tell that the failure to address Telstra’s size and level of integration has also meant a missed opportunity to promote effective competition. That argument was very well made in this place by the member for New England in his speech in support of this legislation. His viewpoint is the same as mine, as we are both representatives of regional seats. Australia lags well behind other developed economies on a range of telecommunications indicators. In the telecommunications markets of other countries, competition drives companies to innovate and provide the best of services at the most competitive prices. In the United Kingdom, for example, the communications regulator reported that the net effect of the functional separation of British Telecom has been positive for both competition and consumers. Closer to home, in New Zealand the separation is only in its early days, but I understand that the preliminary results are again positive. It is important that we raise some of these examples to counter some of the gloom and doom and end-of-the-world scenarios that have been presented by those opposite—who effectively did nothing in the 11 years that they were in government.
The consequences of this lack of competition is obvious in my own region of Tasmania where, despite a good effort by Telstra—and I acknowledge the work of Telstra Countrywide; I have had a very positive relationship with them and those people involved with it, and I thank them for their ongoing efforts—the services available are limited. There is very little competition for the major dominant carrier. This has been well demonstrated in the recent outcry over Telstra’s decision to impose a $2.20 billing fee on people who wish to pay their bills in person. Many have contacted my office, and no doubt the offices of other members in this place, expressing a desire to switch carriers as a result of Telstra imposing this penalty payment. But they know that in reality they have little option but to stay with Telstra. I would again ask on behalf of the many thousands of loyal Telstra customers negatively affected by the charge but, more importantly, insulted by being penalised for paying in person that Telstra drop this penalty fee holus-bolus.
I acknowledge Mr David Thodey and his direct communications with me. It was very nice; he rang me up. I assume he was using a Telstra phone. And I acknowledge that Telstra was prepared to extend the concessions to the Commonwealth health card holders, but I did reiterate that it was not so much the amount as the principle that was involved. Again, I asked him to be a new Telstra and to drop this charge—this penalty fee, this tax on poverty—once and for all. In a more competitive market all carriers would be forced to consider carefully any move to institute wholesale and unpopular changes such as this.
Over the years we have heard many stories where the services offered by Telstra in regional Australia only a few kilometres beyond the local exchanges have failed to meet the basic expectations. Stronger competition will also increase the need to deliver on these expectations or risk losing important custom. Unkindly, but not necessarily inaccurately, Telstra’s idea of competition was recently defined by Melbourne based communications commentator David Llewellyn-Smith as ‘to invest just enough in services to become the least worst option’. Is this what we really want for the people of Australia?
The need for a structural separation of Telstra has been long recognised. The only difficulty in this place is that we have not done anything about it. I have heard some on the other side saying privately that we should have a structural separation and that it should have happened years ago. And those on this side say it as well. Well, here is the opportunity to do it. We ask those on the other side to get on with it so that we actually have a 21st century telecommunications system. The need for that was made quite clear during the inquiry into the structure of Telstra by the 2002 House of Representatives Standing Committee on Communications, Information Technology and the Arts, and it is still highly relevant today. A submission from the University of Melbourne’s CoRE research group cast a critical eye over the subject of Telstra’s virtual monopoly.
CoRE’s Joshua Gans and Stephen King argued that the structure and behaviour of Telstra were key factors in determining both the efficiency of the telecommunications industry in Australia and the overall development of competition and innovation in telecommunications. At that stage, while they did not favour one model over another, they found that a rigorous inquiry into alternative structures was both justified on the basis of economics and important to the future of the Australian telecommunications industry. In the paper they said:
Because Telstra controls the CAN, it is also able to exercise significant influence over the provision of related retail services, such as fixed-line local and long distance telephony, and DSL broadband internet services. Thus, while it faces competitors in some parts of its business, those competitors must deal with Telstra if they want to provide services that allow their customers the ability to receive or make calls to fixed-line users.
The paper went on:
By owning and controlling the CAN, Telstra owns and controls a critical hub in the telecommunications network. Ubiquitous telecommunications services can only be achieved by Telstra’s competitors accessing the CAN.
At present, Telstra’s ability to use its market power in the CAN is limited by various price and non-price regulations. But … many of these regulations are a response to Telstra’s structure.
… … …
In the absence of regulation, Telstra would be able to use its monopoly position over the Customer Access Network both to control the degree of competition in related telecommunications markets and to distort competition in these markets.
Very little has changed in the position of Telstra and the telecommunications market in Australia since that submission of 2002.
In a submission to the same inquiry, noted communications analyst and commentator Paul Budde was highly critical of the telco’s position. He regrettably found:
… the self-regulatory regime has failed to foster real competition in the market and Telstra has been able to use the regime to its own advantage.
Their ‘gaming’ and delaying tactics have resulted in a reduction of competition.
He noted that Australia is the only country in the OECD where such a high level of market dominance is permitted. At the time, Budde urged the committee to consider a proposal to alter Telstra irrevocably, given its central role in the economic life of the nation. He said:
This is arguably the most important inquiry to be held in the history of our telco industry and, as such, deserves to be treated very seriously.
Nothing has changed since then.
The Australian Chamber of Commerce and Industry in its submission to the 2002 inquiry was, I must admit, less enthusiastic about structural separation, but it too was very aware of the problems which existed then and do to this day. The ACCI contended that investment in telecommunications, and thus competition, has been hindered by the significant costs, rapid technology progression and long return time frames. The ACCI’s comments came at a time when the government still held a majority shareholding in Telstra and, while cautious about structural separation, it too saw the need to increase competition. But seven years later this is still to happen in any significant manner—thus, I suggest, testing the logic of the ACCI submission of 2002.
I believe today the support for such a change is even greater. On 7 April the government announced its commitment to reform the current telecommunications regulatory regime, with a discussion paper canvassing options for reform released on that day. A strong response of 140 submissions from a broad range of stakeholders was received, including all major telecommunication service providers, broadcasters, media companies, state and territory governments, the ACCC, disability and consumer groups, business organisations and unions. The overwhelming message from almost every submission was that the current regime does not work effectively to achieve its goals, it is failing business and consumers, and reforms were needed urgently.
We are heading into a new era of telecommunications with the National Broadband Network and all players will be given equal opportunity to be part of this future. Naturally there will be some level of uncertainty as we head down this new road. But the only other option is to sit back and do nothing like the previous government did for so long, and like they are still encouraging us to do today. I have already copped my fair share of criticism from Telstra shareholders in my electorate who were quick to assume that a separation of the company would guarantee a lower share price. I would ask them to take the time to examine the full case and to look at what has happened elsewhere, where such broad telco reforms have been put into place with a great deal of success both for consumers and for shareholders.
It is now part of history that the restructuring of BT, British Telecom, has resulted in a stronger share price and better performance. The same predictions could be made about Telstra if people would stand back and look at the advantages that a more competitive company would offer. It would be hard to argue that anyone else is in as strong a position as Telstra to position themselves as a leader in telecommunications in this country. A separate retail arm could soon become the provider of choice for people around the nation, thereby strengthening its share price. I know it is difficult for all the mum and dad investors who were encouraged by the previous government to be part of the ownership of Telstra, but this is a move that is designed to improve the prospects for all and will ultimately be better for all, including the share price, which has not been the fantastic performer it was expected to be under the current structure. Indeed, under the last Telstra regime, the Telstra share prices dropped by some 40 per cent. So I suggest that a leaner, more competitive Telstra that is hungry for real competition would see this trend reversed.
This bill includes a commitment to protect consumer access to affordable telecommunications services. The reforms give the regulator an ability to enforce existing consumer safeguards and mitigate the risk of Telstra reducing service quality on its copper network prior to the NBN. Amendments in this bill are focused on retaining and strengthening existing regulation to better protect consumer access to and the reliability of basic telephone services. This includes the removal of payphones, something that you, Mr Deputy Speaker Adams, would know that the people of Tasmania’s west coast have been only too familiar with. I know that you, along with the mayor of the West Coast Council, Darryl Gerrity, have battled for years to stop Telstra removing public telephone boxes from areas like Linda, a small community just outside the regional hub of Queenstown. I have no doubt that similar threats to local phone infrastructure exist in other parts of Australia, particularly in regional Australia. The new universal service arrangements proposed in this bill make it clear for consumers of Telstra services, both voice and payphones, that Telstra must supply in fulfilment of its universal obligation, rather than these decisions being left up to Telstra’s discretion.
I have run out of time, but I am very pleased to be able to support this legislation. It will bring about protection for consumers and much greater opportunity for Telstra to make its own decisions to be more competitive, and to have a very competitive regime that is befitting of the 21st century and the technologies that go with it.
I am pleased to have the opportunity to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, not in this instance because I think it is good legislation. On the contrary, I think that a number of questions have been asked and more questions ought to be asked about this piece of legislation. Peter Swan put it very nicely in an article in the Australian on 16 September this year when he said shareholders will be the biggest losers from the government’s unconstitutional moves against the telco. He pointed out that it is in Latin-American dictatorships that we would expect to see this kind of behaviour from a government. He said:
Latin-American dictatorships and the failed Soviet Union are notorious for thuggery in which private assets would be expropriated in the name of the state.
While that might sound dramatic, there is no doubt that this bill has elements of that. Peter Swan went on to say:
As a nation, we love a fair go and, aside from Ned Kelly, we are disinclined to worship theft.
So there are two elements to this. It is about how Australia is going to be viewed by the business community, particularly the international community who traditionally have seen Australia as a great place to invest, when there is a risk that the government can come in and pass an act of parliament and take away your asset without just compensation. But, worse still, in this case we are talking about 1.4 million Australian shareholders who are affected by this action.
The bill, in amending the Telecommunications Act, seeks to prevent Telstra from acquiring specified brands 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. The bill also contains amendments to increase the powers of the ACCC—and that is a concerning element of this—under the Trade Practices Act and changes to the USO and the consumer service guarantee. Essentially, the bill amends the Telecommunications Act to require that Telstra must conduct its network operations and wholesale functions at arm’s length from the rest of Telstra, provide the same information and access to regulated services on equivalent price and non-price terms to its retail business and non-Telstra wholesale customers, and put in place and maintain strong internal governance structures that provide transparency for the regulator and access seekers that equivalence arrangements are effective.
No-one would want to pretend that Telstra’s reputation was pure white particularly during this last decade. Nevertheless, while Telstra has not been perfect, overall it has been a great Australian company and it is delivering an important service to the community, and there are quite strong community service obligations. I think it can be said that the plan put forward by the coalition when we were in government, in the lead-up to the last election, made a lot of sense. Rather than demolish the whole set-up, there were practical ways in which to actually improve the delivery of broadband services to the nation and to make sure that there were service obligations to those areas, many of which I represent, which it would perhaps have been not profitable for a service provider to provide services to. The provisions are contained in a new part 9 of schedule 1 to the Telecommunications Act to be inserted by the bill’s part 1 of schedule 1. These telecommunications reforms, as I said to begin with, need very close scrutiny and the coalition intends to ensure that that happens. Why should we be concerned? Why should we require there to be scrutiny? I think there have been some extremely good media reports on this issue to draw from. I refer to an article that appeared on 9 September in Communications Day headed ‘NBN about as high risk as it gets’ and written by Luke Coleman. He says:
The national broadband network is about as risky as it gets for potential investors, according to one financial analyst. BBY telecoms analyst Mark McDonnell told the Telecoms World conference in Sydney that the NBN policy debate had become “politically charged” and “lacking in any measure of financial or commercial rigour.” He estimated NBN wholesale service will cost well upwards of $113 per month.
McDonnell said the NBN’s $43b 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.
… … …
“Similarly, there is no clarity around whether the punitive $43b is simply the construction and deployment cost, or does it also make some allowance for the start-up operating losses of an entirely new venture we have all come to refer to as NBNCo.
He goes on to talk about the financials, which I will not go into. He finishes by quoting Mark McDonnell saying:
“But doing so under a government led process devoid of any real detail or definition, without any kind of business plan, is unlikely to generate substantial direct investments from the capital markets. Unless these basic limitations are overcome it appears the NBN will proceed mainly through reliance on government funding, sourced ultimately from taxpayers.”
I think that is a sobering warning. Yesterday in the House my colleague the member for Herbert raised a very interesting point, and I am sure taxpayers all over the country will be very interested in this when I repeat what the member said in his speech addressing this bill. He said:
… in April of this year Labor announced a new NBN, NBN mark 2. That is the $43 billion unplanned program—one costed on the back of an envelope—that will see the government own at least a 51 per cent share.
chief executive officer—
and the board an astonishing $43,000 of taxpayers’ money each week.
… … …
That is to run a company that has no customers and provides no services. What a good deal that is for the taxpayer! This is the Labor way.
I thought those words were worth repeating given that there have been delays in setting this up. I think it is fair to say that some of those delays are due to the disinterest of the private sector in buying into this folly known as NBN Co.
The legislation has also been referred to a Senate committee for examination with almost 100 submissions made. This provides an opportunity for all stakeholder views to be heard about the proposed changes, and they have been heard. These changes are causing a great deal of disquiet within the community. Many Telstra customers and shareholders have contacted my office on this issue. Following the government’s failed implementation of its 2007 election promise to provide $4.7 billion towards the upgrade of Telstra’s network to fibre to the node, it now has to break up Telstra in order to implement its new policy of spending $43 billion to create a government owned fibre-to-the-premises network—and people are rightly worried. From one account that I saw it seems it is likely to take 18 years before people can connect. It is clear to me that this action is an admission by the Minister for Broadband, Communications and the Digital Economy that the government’s new NBN policy cannot be implemented without effectively re-nationalising fixed-line telecommunications in this country. The government simply does not want its NBN to have to compete with Telstra; it wants its NBN to be a government monopoly. What a dangerous situation this is, and I will be putting one or two quotes in relation to this.
There have been shareholder concerns, there has been anxiety by the unions and there have been people who question the implications for foreign investment in Australia into the future, because there is simply no guarantee that this will not happen to other businesses, with the government simply deciding that it wants to take over something when it does not want to compete. As was pointed out in Peter Swan’s article, this is the kind of action one would expect in Latin America or in a non-democratic polity. There were issues raised of sovereign risk, and the Australian Foundation Investment Co. had this to say about the sovereign risk aspect:
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.
The Australian Shareholders Association were also concerned about the sovereign risk aspect when they said:
The ASA is concerned not just about the value destroying nature of the proposal for Telstra shareholders, but also about the implications of investment generally. 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. Investors, both small and large will consider that the level of risk of Government or regulator intervention when investing in highly regulated industries is increased by this decision. In addition the decision is likely to impact on the confidence the market will have in future privatisations.
So the concerns are very widespread, and with good reason. It has never been coalition policy to force the break-up of Telstra and until the parliament can be satisfied about the feasibility of the NBN, its final costs and its business plan, Telstra should not be forced to split in order to make way for the NBN and indeed to make it viable. While the government claims that these proposed reforms are about enhancing competition there is no evidence to suggest that they will, in fact, result in better and more affordable telecommunications services for Australians. In fact, an OECD working group and the Productivity Commission has determined that the costs associated with structural separation are likely to outweigh the benefits.
One just has to look at some of the submissions received by the Senate Standing Committee on Environment, Communications and the Arts. For example, David Forman of Competitive Carriers Coalition told the public hearing on 14 October 2009:
We consider structural separation to be a poor policy option. It adds little to competition in the fixed line sector. It adds considerable cost to Telstra and so destroys value for shareholders. We believe the Government has proposed it because it improves the commercial prospects for the NBN, and because it is popular with Telstra’s competitors.
It is definitely not in the best interest of the constituencies. One has to ask why Labor has not bothered to even canvass more practical, realist and cost-effective alternatives to its $43 billion NBN—options consistent with the sensible approaches adopted by other governments. The government’s priority must remain with those parts of Australia that do not currently enjoy affordable access to decent broadband services. I highlighted those parts of my electorate being ignored by Labor when I previously spoke on the Telecommunications Legislation Amendment (National Broadband Network Measures—Network Information) Bill 2009 in this place.
Some 21 communities in the Pearce electorate will miss out as part of this NBN proposal. This means 12,142 persons living in the communities of Bakers Hill, Beverley, Bindoon, Boddington, Brookton, Chidlow, Cuballing, Gingin, Herne Hill, Hovea, Lancelin, Lower Chittering Valley, Muchea, Pingelly, Sawyers Valley, Sovereign Hill, Tuart Rise and Williams have all been dumped in the too-hard basket by this Labor government. That is what this bill does. It dumps these communities—and communities like this right across Australia—into the too-hard basket, leaving them without decent broadband services and without any guarantee they will have them any time in the near future. The interesting thing is, a lot of these communities in my electorate are 30 minutes to one hour’s drive from the CBD. It is not as though you can exactly put them in the remote category, and yet they will be denied these services.
The coalition believes in working towards parity between residents living in cities and those living in rural and regional areas—and, indeed, outer metropolitan areas—and this plan simply cannot deliver that. We as an opposition do not support attempts by governments to ‘pick winners’ in the rapidly changing technology sector. Nor do we believe, in this economic environment, that taxpayers should be made to carry most of the 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. That is not to say that there are no gaps. The coalition is a strong believer in competition as a key driver of service expansion and innovation. We also believe the government can use various levers to encourage investment in broadband services and to ensure provision in under-served 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 unnecessary duplication of telecommunications infrastructure in well-served areas is unrealistic, and we heard about that in speeches made in this place yesterday by members of the coalition. It is unrealistic and it is also proof of a minister seriously out of his depth.
The coalition recognises the importance of universal access to fast, affordable and reliable broadband. We also fully support the continued enhancement of broadband services, including the deployment of next generation networks and services. In fact, the coalition government was set to invest $958 million in its rural and regional broadband network project, OPEL, 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 backhaul into regional and rural centres. Our plan would have been delivering services right now and would have been completed by the end of this year. Instead, Labor’s proposal to starve Telstra of spectrum will actually erode competition for this highly competitive and growing sector.
The fact that this government has a minister for deregulation is a joke. Since 2007 we have seen constant government interference in private enterprise and a raft of new regulations introduced. It is important that we have appropriate regulation and legislation in the business sector, but we have to be very careful that we do not overdo it, that we manage those tensions between our obligations in this parliament to the community and the opportunity for businesses to operate in a competitive environment. Frankly, this plan belies the Prime Minister’s claims of being an economic conservative.
The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is not small pie; it is not something that you can ignore easily. It involves amending five different acts and it is very complex. Yet the government wants this legislation rammed through in just a few weeks. I find that absurd. Before we can make a decision about Labor’s telecommunications bill, the government needs to give us more information about what its broadband proposal is. We are being asked to pass a bill intrinsically connected to the NBN, and in doing so give unprecedented powers to the ACCC, before we know how the NBN rollout will occur. It would be reasonable for us to wait for the implementation study for the government’s proposed National Broadband Network, which is not due until February next year.
The government wants to force Telstra to structurally separate, whether willingly or unwillingly, and the government is in a mighty hurry to do that. Labor’s 2007 election policy was:
Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within the company …
They did not indicate before the election that structural separation was on the table, and there is no mandate for the government to do so.
Telstra is negotiating at the moment with the government about models for separation of its retail and cable networks. These negotiations are reportedly progressing constructively and they should be allowed to run their course. The government cannot build its NBN without Telstra, so it is desperately trying to force Telstra’s hand one way or another, but shareholders, employers and customers look like wearing any fallout that might accrue from it. We do need to consider the impact of any changes on shareholders, because they should not be attacked or be the losers by the government’s agenda. We need to respect the rights of the 1.4 million shareholders.
We must oppose any attempt by the government—and this, I think, is an enormous issue, particularly for regional Australia—to abolish the universal service obligation through its associated legislation and give the minister responsibility for determining what should not be in the USO. We do not want to see the USO being subject to the whims of the minister of the day.
The Nationals will assess our attitude, as we do with our coalition partners for any new model for telecommunications in Australia, on the basis of whether it will deliver quality services and technology to our regional Australians. We support measures to increase competition and consumer protection in regional areas, but we do not know if this bill will achieve those things.
I cannot forget in all of this that when we were in government we signed off on a deal with OPEL which by now would have delivered to 98 per cent of Australia, including regional Australia, modern telecommunications in the form of broadband. We still have no idea what the government’s NBN is, but it is aiming for something like only 90 per cent of Australia. Regional Australia might be the beneficiary of this, but when? It certainly will not be in 2009—if ever. When will it be? When the government announced this policy earlier this year, or was it late last year, even then it was talking about another five or six years before regional Australia seriously got a look-in. The government has already reduced the proposed coverage of its NBN network from 98 per cent to 90 per cent, as I said; who is to say it will not fall further? Certainly, a very large part of my electorate would be excluded from this. All the small towns would be excluded. Maybe a few big towns would be beneficiaries, but certainly the rest of my electorate would not be.
The cost of the Labor scheme has blown out from $4.7 billion to $43 billion, so regional Australia is not a good deal. We have lost $2 billion out of the Future Fund. We have lost nearly $2 billion from the OPEL deal—$1 billion from government and nearly $1 billion from Optus and Elders. That money is now going to be spent on the whole of Australia rather than on just regional Australia.
The coalition fully recognise the importance of universal access to fast, affordable and reliable broadband. That is why we went to the Australian people with the OPEL scheme. But Labor cancelled that network, which would have seen new services delivered this year to around 900,000 underserviced premises. Let us remember that our plan was nearly $1 billion, with $958 million in government money and $1 billion from the private sector. Rudd’s plan is $43 billion, and it leaves out eight per cent—
Mr Deputy Speaker, I rise on a point of order. The member for Calare has been in this parliament long enough to learn to refer to the Prime Minister by his title and not by his surname.
I am chastened, Mr Deputy Speaker. It was very remiss of me. I feel very chastened. As I said, we need to know a bit about this plan. Nobody knows. I do not think Telstra knows. The government certainly do not know how they are going to do this plan. It is ridiculous to try to push legislation not just through the parliament but past the Australian people without knowing what that is.
Why do they need to? Why do the Rudd government—the Prime Minister’s government—need to rush this through when they do not even know what they are going to do with it? We can stand here and say, totally correctly, that we were going to look after all but two per cent of regional Australia, and that two per cent obviously had the opportunity to receive a subsidy that allowed them to go on satellite. This plan of the Rudd Labor government will leave 10 per cent—a very high proportion—of regional Australians without modern broadband.
They are in a panic to get this through. They are in a panic to get the ETS through. This government seems to be in a panic to rush things through rather than to get them right. Nobody has any idea why this Labor government wants to put the CPRS or an ETS through before they know what the rest of the world—not to mention the Americans—are doing. In the same way, none of us know why they want to get this telecommunications legislation through before they or anyone else knows what they are going to do.
I have come to this debate today on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 with an open mind. I must say from the outset that the government has failed to convince me at this stage as to the merits of this legislation. It may shock the Parliamentary Secretary for Victorian Bushfire Reconstruction, who is at the table, but there are a few basic principles that I try to apply when considering any legislation before the House. To begin with, I tend to accept the premise that the government has been elected to govern. I respect that view of the people of Australia in 2007 and I do not try to be deliberately obstructionist in that regard. Where the government has a clear mandate for action in relation to specific policy positions that were presented to the broader electorate, I tend to take the view that it has a right to pursue that agenda. It may not be a fashionable view among all on this side of the House, but it is a view that I tend to support. That is not to say though that the opposition should vacate the field. It most certainly must hold the government to account, and that is what I think the opposition are trying to do in this regard.
This brings me to a couple of other principles that I try to apply in my consideration of any legislation. I believe the legislation must be in the best interests of the people of regional Australia before I will support it and certainly it needs to be in the best interests of the people of Gippsland, who have sent me to this place to get the best possible outcomes on their behalf. It is in this regard that I do have some serious doubts about the legislation before the House and its capacity to deliver benefits to the people of regional Australia, who choose, obviously, to live outside our main cities.
I have followed this debate with interest. I would like to pick up on the commentary of the member for New England earlier this morning. I must admit that I do not always agree with the member for New England, but there were parts of his contribution which I thoroughly supported. The member did indicate that the National Broadband Network is critical infrastructure that has the potential to deliver enormous benefits, particularly to regional areas, throughout the rest of this century. He made the point quite well that where you live will become less relevant in terms of your capacity to do business or access health and education services in the future. It is a point that has been made by others on both sides of the House, including by the Leader of the Nationals, who spoke quite strongly on this issue earlier this week.
The word ‘potential’ is where it tends to get bogged down and where my reservations arise with the legislation before the House. I am not confident that the government has the commitment to deliver for regional communities. When it comes to telecommunications infrastructure, Gippslanders have no reason whatsoever to trust this government to act in the interests of regional Australians or Gippslanders in particular. The evidence has been all to the contrary. We all remember the $2.4 billion Future Fund, which was meant to be kept in perpetuity to invest in improved services in regional areas. The Rudd government has stolen that money from regional communities. It has been absorbed into other programs and it is gone. It will never be seen again in terms of its intended purpose to assist regional communities.
Over the years of the previous government there were some improvements to telecommunications services in regional areas. If you believe those opposite, the previous government did nothing anywhere for anyone or anything. That is a juvenile attempt, I believe, to dismiss the legacy of the previous government. It simply does not wash with the Australian public. No government—not even some of the appalling state governments we have at the moment—deliberately sets out to do nothing.
Work with me, Parliamentary Secretary. No government sets out to do nothing. We may always want more, but the Australian public expects the government members of the day to move past these very juvenile attempts to rewrite history.
The Howard government did deliver on many fronts. In my electorate there have been some improvements in mobile phone access over the past decade, but it does remain one of the biggest issues in my community. The additional towers that were established under the previous government’s Black Spot Program and allowed extended coverage throughout many parts of Gippsland have made it possible for service to be delivered to some areas that companies would never have justified servicing on a purely commercial basis. This effectively subsidised coverage has improved safety in my region.
As the parliamentary secretary is well aware, in terms of the most recent bushfires, coverage in emergency situations is a most critical issue for us in the electorate of Gippsland. On that point, I reflect on the need for improved mobile phone coverage in the future in terms of emergency services coverage. I already have spoken today on the new early warning system for natural disasters. I give credit to the government for undertaking that. I believe it has made a $15 million contribution to Telstra to pursue that agenda.
It is timely that the parliamentary secretary who has been involved in the bushfire reconstruction effort is in the chamber, because I believe it is important that we take the next step in the new national warning system. I understand that in the first stage it will be able to deliver voice messages to landlines and text messages to mobile phones based on their billing addresses. But I believe that, in the future, to deliver the real benefits to locals and visitors to Gippsland the system needs to progress to the next stage of delivering text messages to mobile phones based on the actual location of the phone at the time. That is the aim that I believe the government is pursuing. I understand the state and federal governments are both keen to pursue those as future stages of the agenda of a national early warning system. It is a real challenge.
Unfortunately, many areas in my electorate where the mobile coverage is poor are also those areas that are most exposed to the bushfire risk. I have sought additional funding from the federal government to deal with some of these black spot issues going forward. Areas in the Latrobe Valley were some of those that were directly impacted by the bushfires of Black Saturday and the earlier fires at the Delburn complex in the Boolarra area. There are areas right around Latrobe Valley where remarkably, in small towns only five, 10 or 15 minutes from major Latrobe Valley centres, the mobile phone coverage drops out. There are difficult issues to contend with. Further east, geography provides many obstacles to improved mobile phone coverage, but we are going to have to deal with that difficult terrain and we will probably need to subsidise services to those areas in the future if we are going to improve community safety and get the full benefits of any national early warning system.
I wrote to the Minister for Broadband, Communications and the Digital Economy in relation to this issue. The response I have received gives me no confidence in relation to legislation before the House today and the ongoing issue of telecommunications services to regional areas—whether it be mobile phone coverage, in this instance, or the future National Broadband Network. In his response to my concerns about the township of Mallacoota, one of the towns identified as a bushfire priority risk by the Victorian state government, he said:
The Australian Government appreciates the importance of mobile telephony to Australians. However, the decision to provide mobile phone coverage is primarily a commercial matter for mobile phone carriers. In making the decision to extend coverage to a particular area, a mobile phone carrier will consider a range of factors, including site availability, cost structures, likely levels of demand from users and overall economic viability of the service.
That message is fairly clear, I believe, but it is primarily a commercial matter and the minister has no intention of implementing a black spot program to assist. I think that draws us to the very point of the legislation before the House today. The issues facing regional communities are that, with the rollout of the National Broadband Network and broader mobile phone coverage, the carriers will quite naturally go to where the profits lie. I fear that there will be people at the end of the line who will miss out completely. That is my greatest concern with the legislation before the House today.
I do not want to pretend for a second that I am some sort of Telstra cheerleader, and I am not going to stand here and pretend that everything is fine in regional Australia or in my own electorate of Gippsland. I am not even going to try to defend Telstra’s record, particularly under the reign of the previous chief executive. I think there was an appalling lack of judgment at times by Telstra in relation to its handling of its regional customers. But I am a realist, and I want to know that under the government’s plans regional areas will actually be better off.
Those opposite have attempted to ridicule speakers from this side of the House who have sought to delay the progress of this legislation to make sure we get it right. I have a great deal of sympathy for the view of delaying it until we get it right. The government does not have a clear mandate for this policy position. Only a few months ago the minister was quoted as saying he had no intention of forcing such a separation upon Telstra, and it has never been put before the Australian public. To the best of my knowledge, it has never been Labor or coalition policy.
Having said that, I am not as hardline as some others about the broader issue of structural separation. I do believe we need to take steps to drive competition, particularly into regional areas. Telstra, as I have mentioned previously, has not always behaved appropriately in the best interests of its regional customers. I am hopeful that the new CEO, David Thodey, will be keen to address that situation. I had the opportunity to meet with Mr Thodey earlier this week and I was heartened by his comments and his attitude towards his regional customers. I believe that we may see a change of direction in that regard. I have been very critical in this chamber of Telstra’s handling of the user charge of $2.20 it applies to customers who pay their bills with legal tender across the counter at various agencies. I believe the point I made to Mr Thodey in that regard was well taken. I believe that Telstra may in the future take a more charitable view of its customers, particularly its older customers and those in regional areas.
There are areas where it will never be commercially viable for companies to invest in regional services. That is where I believe the Future Fund was designed to assist, along with the universal service obligation. As I indicated, I can see some merit in the position to help drive competition, but the process undertaken by the government must be appropriate to the circumstances. I fear that the government has held a metaphorical gun to the head of Telstra and its shareholders. Those opposite have discounted the arguments put forward in relation to the impact this decision will have on the shareholders of Telstra. I am not suggesting for a second that the interests of shareholders have to be our primary concern in this place, but they most certainly should be considered by us as responsible legislators. More than one million mum-and-dad shareholders will be affected by this decision, and I believe it is flippant and irresponsible for those opposite to just brush that issue aside.
It concerns me that we really do not have a complete understanding of all the issues in relation to this legislation. The reason we do not have a complete understanding is that the government simply has not done the homework or, if it has done the homework, it has not taken the people of Australia into its embrace and explained to them exactly what is intended. In a question in the House earlier this week the Leader of the Opposition asked the Prime Minister for more information on the National Broadband Network. It was a very pertinent question. The Leader of the Opposition asked:
How does the Prime Minister justify urging Australians to buy bonds in the $43 billion National Broadband Network, assuring them that those bonds would be a good investment, asserting that the National Broadband Network would be commercially viable and claiming its services will be affordable when the finance minister and, just a moment ago, the Treasurer have admitted that all of those statements were made without any business plan or cost-benefit analysis—in order words, without any reasonable or responsible basis for believing those statements were true?
In his answer, the Prime Minister, as he often does, sought to deflect attention to everyone but himself. He came out swinging in relation to the National Party. He said:
… the National Party in particular, surprises me, because so many Australians out there lack high-speed and effective broadband services.
There is no disagreement there, but under his own plan so many Australians will continue to not receive high-speed broadband services. The Prime Minister failed to mention that there was actually no business plan for this $43 billion National Broadband Network. I fear that the government is flying blind and it troubles me in relation to the legislation before the House at the moment. As I said at the outset, I am not interested in being obstructionist just for the sake of it, but I do have considerable reservations and support the delaying of this bill until the NBN implementation study is presented to the parliament. After two years of delivering absolutely nothing except empty promises, we can afford to wait for the findings of the $25 million study that the government has commissioned. I believe the House will be better informed in that regard with the findings of that study before it.
The government is asking me and other members to take what I believe is an enormous leap of faith. They are simply saying, ‘Trust us, everything will be okay; sure, we do not have a business plan for the $43 billion NBN program but you can rely on us.’ I am sorry, but I do not have that much confidence in this minister or in the government. We have already seen the National Broadband Network change remarkably in terms of the promises being made by this government. At first we had this fairytale about delivering fibre-to-the-node coverage to 98 per cent of Australian homes at a cost of just $4.7 billion. The Australian community should have signed up straightaway on that one. They were conned. The new promise is coverage to just 90 per cent of homes at a cost of $43 billion, but we really do not know where that figure of $43 billion has come from. It looks to me like it has just been some stab in the dark—a best guess. There is no business case or infrastructure plan that I have been made aware of. The promise has been downgraded to the extent that it excludes towns of fewer than 1,000 people. There are more than 1,000 towns, as I understand it, in Australia with fewer than 1,000 people in them and many of them are in the electorate of Gippsland.
I mentioned earlier that the NBN has the potential to deliver even greater benefits to regional areas than anywhere else, but many of the towns in Gippsland are simply not on the government’s radar, let alone in the government’s National Broadband Network plans. In all good faith to my electorate, I cannot support this proposition at this stage and I urge the government to wait until the implementation study is presented to the parliament.
One other aspect I would like to touch on is the confusion over the future of the universal service obligation under this bill. I take up the issue raised by the Leader of The Nationals on this matter. He highlighted that under this bill the legislated universal service obligation is abolished and it will be left to the whim of the minister to decide which services are provided. I do not believe this is good enough for regional areas. We have already seen the whim of the minister at work with the removal of the $2.4 billion Future Fund—an enormous betrayal of trust with regional communities. Before I can have confidence that this bill is in the interests of regional Australia I will need more information from this government in relation to its broadband proposals and how it intends to deliver those services to rural and regional communities.
There is a lot at stake for regional communities, as many people have indicated in their contributions to the debate before the House, because they have the most to gain from improved telecommunications services. The tyranny of distance is one of the main factors holding back the growth of regional communities and technology has the capacity to overcome a lot of those barriers. I believe that rural and regional Australians have every right to expect better telecommunications services in all its forms in the future. As the Leader of The Nationals correctly identified, a robust communications network will have a range of applications in regional Australia, both social and economic. It will create better health services, better education, and greater employment and business opportunities. I urge the government to take the time to get this right.
Finally, in the time allowed to me, I would like to refer to a media statement today from the shadow minister for broadband, communications and the digital economy. In his media statement, the shadow minister said:
Since coming to office the Rudd government has already: abolished the $2.4 billion Communications Fund, established by the Coalition for telecommunications upgrades in rural and regional Australia; cancelled the $2 billion OPEL project which would have seen fast and affordable broadband services delivered throughout under-served rural and regional areas this year; and is winding back the Australian Broadband Guarantee program which provides subsidised services for Australians living in under-served areas.
This government already has a dreadful track record and should not be believed when it says it is acting in the best interests of rural and regional Australia.
That just about sums it all up for me. The government has to prove its bona fides to regional Australians before it can reasonably expect us to support this bill.
I rise on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 to support the amendment moved by the member for Dunkley. It was only a few weeks ago that I rose in this place to speak on the National Broadband Network information measures and I took the opportunity to point out many of the difficulties that the government had brought upon itself in its haste to try to meet some electoral commitments that it had probably blurted out unintentionally. I took the opportunity at the time to point out how the government had announced, first of all, the $4.7 billion package with 98 per cent of Australia to receive fibre to the node, how it had announced that policy without really understanding what it meant and the possibility of getting private partners to join with it. I also pointed out how then the government had jumped into the $43 billion version with, once again, no business plan and not truly understanding the implications of what it had been saying. I highlighted the fact that it did not have any financial plan, any business plan, for the implementation of either of these policies. I also took the opportunity to point out the incredibly low uptakes of expensive high-speed broadband around the world and, in particular, pointing to the uptake in Finland of 1½ per cent and Singapore of one per cent—which I will probably come back to later. I particularly took the opportunity to point out how regional and rural Australia was being ripped off and now was going to be totally left behind on the deal.
So what has changed? As I predicted at that time, another collapse of process; and now another enormous shift of policy, an untelegraphed shift of policy, by the government as it recognised it had no chance, once again, of delivering on its grand commitments. This enormous shift in policy is nothing less than a nationalisation of a private Australian company—in this case Telstra. It is probably not something that I expected to see in my lifetime and certainly not something that we should leap into without due consideration. The moves by the government to force Telstra to separate their business will effectively force that part of the business into an unavoidable sale, takeover or merger with the only probable investor in the broadband upgrade being the government. The government is the only probable partner, given that it has signalled that it is prepared to throw $43 billion of taxpayers’ money at the deal and that it could not possibly be supplanted by any other partner.
Having Telstra as the only possible customer is likely to mean that Telstra shareholders will get a haircut or that taxpayers will own a network that will result in losses for Telstra shareholders. The alternative is that taxpayers may well be left with an asset—which the government has committed to sell five years after completion—that may not be worth all that much. The government has moved so far on this policy since the last election, since we heard the commitment to build the fibre-to-the-node network for 98 per cent of Australia, commencing before the end of 2008 and using what now seems like a very small amount of public money, given the way this government has run up debts. That ‘very small’ amount of money—and I put that in inverted commas—was $4.7 billion of taxpayers’ funds.
So what is the argument that the government should own the distribution network for telecommunications, that we should legislate to form a government monopoly in an industry? Imagine if anyone were to propose the same for the mobile network—the most dynamic, competitive and fastest growing of all forms of communication. What would the public say if we were to propose to get rid of the competitive nature of that market that has driven innovation and choice? The mobile sector was once dominated by Telstra, but it no longer even has the biggest share. The flexibility in that market has led to a sector where access has continually increased and the price of services has continued to fall. It is a sector where individual operators continually introduce new technologies. Imagine what it would mean for other businesses who have vertically integrated business models if they were to be pulled apart by the government. Imagine the loss of value, the loss of confidence in Australia’s business models if the government were to take this attitude across other industries. While many of us are not always happy with the power of some of our large industries, the reason they are so successful is that they do have integrated business models which provide special advantages in the market.
There are myriad complications inherent in this legislation that could not possibly be explored in the time frame. The minister only flagged these moves a month ago, then tabled the legislation and here we are, being expected to vote before the government’s own implementation committee—which has cost $25 million—has reported. We have little justification, once again, to bring it all under government control and make the government the regulator, owner and operator of the nation’s telecommunications network.
There were a couple of underlying reasons for the sell-off of Telstra. One was because the monopoly government corporation, as it was then, was unresponsive, lead-footed, lacked innovation and provided expensive services which were getting more expensive. Another reason for the sell-off of Telstra was the enormous debt Australia found itself in as a parting gift of the then Labor government. It seems remarkable that at a time when, as a nation, we will soon owe more than $200 billion we would be contemplating borrowing another $43 billion to build this new network.
So how did we get to this point? It all started during the last election campaign, when the then Leader of the Opposition, Mr Rudd, was selling himself as ‘John Howard lite’. Nothing much would change; remember that? The attitude was: ‘Tax policy; we’ll copy that. It’s about right. Economic settings; they’re good. Immigration policy’—that is a moot point at the moment—‘We will do that about the same.’ We all remember it well. We certainly had different policies on industrial relations. Mr Rudd was looking for some big ideas, some broadbrush—
Thank you, Mr Deputy Speaker, but at that time he was Mr Rudd; he was not the Prime Minister. I couched it in terms of the time frame, but I am happy to correct myself. At that time, the now Prime Minister, Mr Rudd, was looking for some big ideas, some broad vision stuff, so he committed the Labor Party to the National Broadband Network. It was to cost $4.7 billion and private industry was to match that amount. The government was to build a 12-megabyte fibre-to-the-node network for 98 per cent of Australians. Work was to commence before the end of 2008. That time is well past. At the time I thought this outcome extremely unlikely. I remembered the great Telecom rollout to rural Australia of the seventies and eighties. That was years and years of work and involved thousands and thousands of kilometres of deep ripped cables. I could not believe any government or private operator could possibly hope to duplicate that network for a sum somewhere near the proposed total of $10 billion.
The plan was to steal the $2 billion Communications Fund, which had been put in place to protect regional and rural Australia, and add another $2.7 billion of taxpayers’ money. The idea was that private enterprise would fall over itself to find another $5 billion to build this fibre-to-the-node network. Incidentally, the only part of this deal ever delivered was the stealing of the $2 billion—a great example of the decisive, effective action that the Prime Minister is so proud of trumpeting. Unfortunately, nothing else happened.
It became obvious that we had policy on the run. The government had not planned or consulted with the industry, and they most certainly had not commissioned a business case, because after 18 tortuous months the process collapsed. Despite interest from six parties, not one could deliver the goods for the money. Not one could find a business case that worked. But, not to be daunted, the Prime Minister proudly announced this total failure as a victory and committed the government to not a $10 billion network but a $43 billion fibre-to-the-house network for 90 per cent of Australians. We know that this was once again policy on the run. The government had not commissioned a business case and, once again, they had no idea how they were going to deliver on this grand promise. The government must have been alarmed at informed public criticism and industry scepticism about the chances of this network ever being viable.
We should remember at this point that there are fewer potential customers for this $43 billion project that will service 90 per cent of Australia than there were for the $10 billion model that was proposed to service 98 per cent of Australia, and the industry could not make the sums stack up on that model. So the Prime Minister and his minister for telecommunications had an enormous problem: high public expectation, a financial disaster on their hands and no plan for delivery. I remind the House that the last time I spoke on this issue I predicted that this plan would collapse as well. That is exactly what has happened.
So now we have the next impromptu plan. We have the effective nationalisation of Telstra, which for all intents and purposes will see a forced break-up of the company. I am almost certain this plan has had no more consideration than the last few but is seen as a get-out-of-jail card for the government. It is no more than propaganda for the government to say Telstra has a choice on this issue, but by denying extra bandwidth for mobile services they are holding a gun at the head of the company. Mobile services are the growth part of the industry. Telstra will have to have the bandwidth to roll out its 4G technology, for if they do not then customers will be forced to move to other providers when their 3G handpieces, which we all have now, reach their use-by date. So to pretend that Telstra has a choice in this game is rubbish! The only choice they have is Hobson’s.
Some would ask why we should feel any compassion for Telstra, but there are a number of messages here which do not sit comfortably with me. National takeovers of private industry are not something which happen in free-market economies. The message to investors is particularly bad, and in the case of Telstra we are looking at the biggest shareholder base on the Australian stock market, with over 1½ million investors, and a far bigger holding indirectly through our superannuation funds. They all stand to get a haircut with this deal.
The costs of structural separation to Telstra will be enormous. How do you pull apart a company which, as the core part of its business model, has strands running from top to bottom? Billing systems, overlapping maintenance workers, transport systems—all designed to service the whole company. Will the shareholders or taxpayers pick up this bill? The challenge for Telstra, the owners and operators of the copper network and the major player in the fibre network around Australia, has been to try to remain competitive with the fast-evolving mobile network. This has seriously eroded the company’s profitability. After all, we all know hundreds of people who have disconnected their fixed services. So this legislation attacks Telstra’s efficiencies and then will shift the risk of the ageing copper network to the new company, which ultimately will be owned and controlled by the taxpayers.
To keep in business, Telstra has made enormous efficiencies. To be fair, many—particularly those who live in electorates like mine—have not been happy about some of the changes as local work crews have been disbanded. However, no-one should ever think there are free lunches out there. If Telstra were to put back all the work crews, either the prices of all the services would rise significantly or they would have to start closing down networks. As always, we can all long for the idyllic bliss of our youth, but we cannot bring it back. I remember the local wars in the 1980s as my friends and neighbours were faced with bills worth thousands and thousands of dollars when the then government owned Telecom was asked to connect copper network to their farms. It caused an enormous ruction in my district; people were asked to pay bills of $8,000 and $10,000 to get a phone connected. Memories can be funny things sometimes. It is a part of human nature to remember the good times and sometimes forget the bad. But I return to the issue of the day: significantly increasing the price of access is simply not an option as all it will do is accelerate the abandonment of the network in favour of mobile services.
So what will happen once the government takes control of this network? The government will be the regulators and will set the price for access to the network. We must question the new company’s ability to raise the cost of access which, when given the input of capital that the government is planning to pump in, will provide for an unprofitable company. The problem they will face will be the continual improvement and competitiveness of the mobile network which will limit their ability to compete in the marketplace. So, unless the government has once again changed its policy on this—and who would know?—the plan is to sell off the company five years after completion of the National Broadband Network. If it is not profitable, the price will be discounted until it is, at great loss to the taxpayer. Or perhaps they will not sell and will continue to operate the network themselves—that is, the government and the taxpayers—and taxpayers will pick up the bill for any losses that this company is likely to incur.
Let me return to some of the issues I raised in this place last month. I spoke earlier about Finland, a nation that has been quite aggressive in its broadband rollout. The government was planning to guarantee delivery of 100-megabyte capability, with fibre-optic to every house and business. In reality they have been able to get 100 megabytes to about 40 per cent of homes and business because—this really is worth noting—of the vast cost of delivering services to its remote areas. If Finland is having trouble with its remote areas, you can only imagine what it is like in the electorate of Grey, where I come from, which is an area bigger than New South Wales. In Finland, the cost of access to a 100-megabyte service is about 2½ times as much as the generally available 10 megabytes. So how many Fins are signing up for this service? The take-up rate is just 1½ per cent, so how can anyone make a business case if your total market is just 1½ per cent? Clearly something has to give. Even in Helsinki, the place with the highest population density, it is proving difficult to sell the service. In Singapore, where 100 megabytes is available, the take-up rates are as low as one per cent.
Following the Prime Minister’s thought-bubble commitments, you can imagine how horrified they must have been as the reality of what they had committed to sunk in. There are 10 million potential users in Australia, and if we were to achieve a 1½ per cent uptake that would be 150,000 customers. A network costing $43 billion, as the Prime Minister had proposed, would equate to a debt of $286,000 for each connection. So now, in panic, the next idea is to nationalise the Telstra network and force anyone who wants fixed-line services on to that network. I have no more confidence that they know anymore about the mark 3 version than they have done with anything else in that field, and so after two years of abandoning policy and announcing new ones and no action, it is now an emergency that we force this legislation through the parliament in the next few weeks. It was introduced in the House two days ago and is likely to be rammed through today.
What will be the effect of all this on my constituency—the 130,000 people spread over the part of South Australia that is, as I said, bigger than New South Wales? You can be sure it does not look good. One of the earlier government plans, if it is fair to call it that, committed to a fibre-to-the-node network for 98 per cent of Australians. That electoral commitment went out the window a few months ago and now we are down to a premium service for 90 per cent of Australians, You do not have to guess who the losers are: it is regional Australia. Towns with fewer than 1,000 people will miss out; they will stay on the current satellite service. I am probably the only member of this place who has no mobile phone service at my home and accesses the internet on a satellite signal. I know what the capabilities are like. Towns in my electorate like Booleroo Centre, Cleve, Yorketown, Wudinna, Gladstone, Kimba, Minlaton, Cummins, Stansbury and a host of others will be the losers. I estimate that more than 18,000 people will miss out on fast broadband in Grey. But they will not be entirely forgotten; they will certainly qualify for their full share of the $43 billion debt.
We do not know what the government has planned for country Australia. It really has just put it in the too-hard basket. What kind of service will the nationalised telco be required to provide to those of us who live in rural and regional areas? Unfortunately, we do not know, because this legislation is being forced through in such haste. The compulsory takeover of Telstra by the government has tried to hide the reality of what they are doing by claiming that Telstra has a choice in this structural separation. We are in a totally open-ended position where neither we, nor Telstra nor the government have any real idea where we are heading: what kinds of services will be offered, particularly to my constituency, and in fact what kind of liability the taxpayer will be faced with in the longer term. Yet the government demands we make a decision on the forced break-up of a public company in the next few weeks—I would suggest even perhaps this afternoon in this place. (Time expired)
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.
The original question was that this bill be read a second time. To this the honourable member for Dunkley moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.
Question agreed to.
That this bill be now read a second time.
Bill read a second time.