House debates

Tuesday, 16 November 2010

Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010

Consideration in Detail

4:52 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

We have a series of amendments here of which notice has been given. I will be seeking leave in a moment to move the amendments in groups. For the ease of honourable members, in the amendment they are referred to under the headings spectrum and pay TV, disallowance of instruments, competition, procedural fairness and merits review. Those are the sections that we are referring to. We can deal with all of those as a group. I seek leave to move the following amendments together. They are amendments 1 to 17, 24, 33-40, 43, 45-47 and 64-65, as have been circulated in my name.

Leave granted.

I move:

(1)    Schedule 1, before item 1, page 4 (line 5), omit the heading (Act name).

(2)    Schedule 1, item 1 to 5, page 4 (lines 6 to 24), omit the items.

(3)    Schedule 1, item 6, page 5 (lines 2 to 5), omit the item.

(4)    Schedule 1, items 11 to 15, page 5 (line 22) to page 6 (line 19), omit the items.

(5)    Schedule 1, item 17, page 6 (lines 27 and 28), omit “, 577CD or 577ED”.

(6)    Schedule 1, item 17, page 6 (lines 29 and 30), omit the note, substitute:

Note:   Section 577AD deals with an undertaking given by Telstra.

(7)    Schedule 1, item 18, page 7 (lines 1 to 6), omit the item.

(8)    Schedule 1, item 19, page 7 (lines 10 and 11), omit “, 577CD or 577ED”.

(9)    Schedule 1, item 19, page 7 (lines 12 and 13), omit the note, substitute:

Note:   Section 577AD deals with an undertaking given by Telstra.

(10)  Schedule 1, item 21, page 7 (lines 18 to 23), omit the item.

(11)  Schedule 1, item 22, page 7 (lines 27 and 28), omit “, 577CD or 577ED”.

(12)  Schedule 1, item 23, page 7 (lines 31 and 32), omit the note, substitute:

Note 1A:              Section 577AD deals with an undertaking given by Telstra.

(13)  Schedule 1, items 24 and 25, page 8 (lines 1 to 8), omit the items.

(14)  Schedule 1, item 26, page 8 (lines 12 and 13), omit “, 577CD or 577ED”.

(15)  Schedule 1, item 27, page 8 (lines 16 and 17), omit the note, substitute:

Note 1A:              Section 577AD deals with an undertaking given by Telstra.

(16)  Schedule 1, items 28 and 29, page 8 (lines 18 to 25), omit the items.

(17)  Schedule 1, item 30, page 9 (lines 5 to 24), omit the outline box, substitute:

•      Telstra may give an undertaking about structural separation.

•      The undertaking comes into force when it is accepted by the ACCC.

(24)  Schedule 1, item 30, page 14 (lines 32 and 33), omit subparagraphs (vii) and (viiii).

(33)  Schedule 1, item 30, page 35 (line 26) to page 44 (line 24), omit Division 3 and 4.

(34)  Schedule 1, item 30, page 44 (lines 29), omit “, 577C or 577E”.

(35)  Schedule 1, item 30, page 46 (line 4) to page 52 (line 2), omit Division 6.

(36)  Schedule 1, item 30, page 52 (line 7), omit paragraph (a).

(37)  Schedule 1, item 30, page 52 (line 8), omit “another”, substitute “a”.

(38)  Schedule 1, item 30, page 53 (line 20), after “control of” insert “a telecommunications network if”.

(39)  Schedule 1, item 30, page 53 (lines 21 to 22), omit paragraphs (a) and (b).

(40)  Schedule 1, item 30, page 53 (line 23), omit “if:”.

(43)  Schedule 1, item 31, page 70 (line 18) to page 75 (line 26), omit Part 10.

(45)  Schedule 1, item 36, page 76 (line 16), omit “, 577C or 577E”.

(46)  Schedule 1, item 36, page 76 (line 18), omit “Note 1”, substitute “Note”.

(47)  Schedule 1, item 36, page 76 (lines 20 to 23), omit Notes 2 and 3.

(64)  Schedule 1, item 249, page 194 (line 28), omit “, 577CD or 577ED”.

(65)  Schedule 1, item 249, page 195 (lines 1 and 2), omit subparagraph (iv).

These amendments serve to remove the ‘gun at the head’ provisions of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 which provide ministerial discretion to bar Telstra from bidding for next-generation 4G wireless spectrum, via a disallowable instrument. These provisions are profoundly offensive. They are designed to force a private company which was sold to the public as an integrated telecommunications company by the Commonwealth to take, under extreme pressure, certain actions to restructure its own business.

As honourable members are aware, we support the structural separation of the network business of Telstra from the retail business. That separation can obviously be achieved ideally structurally or alternatively voluntarily, but it should be done in a way where it is plainly in the interests of Telstra shareholders to do so. It should not be done at the point of a gun. These provisions threaten Telstra with being forced to divest its HFC pay-TV cable assets and/or its 50 per cent interest in Foxtel if it does not voluntarily structurally separate in a way acceptable to the government. There is nothing voluntary about it. As I said earlier, we are moving these amendments as a single group for drafting reasons largely so that the consequential changes to the bill are consistent.

The government have claimed that they would not be able to get a deal with Telstra without holding a gun to its head. The fact that they justify this extraordinary means by reference to the end of achieving a transaction that creates a massive government monopoly just shows the extent to which this is truly an abuse of the government’s power. These amendments would serve to remove those provisions that hold the gun to the head. The most significant among them are those that are at items 30, 33 and 35, which remove a number of divisions and sections from the bill. I commend them to the House.

4:56 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

The government opposes these amendments to the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 and we do so for very good and practical reasons. These amendments moved by the coalition relate to spectrum and undertakings about hybrid fibre coaxial networks and subscription television broadcasting licences. The shadow minister referred to these provisions as the so-called “guns to Telstra’s head”. The coalition’s amendments are not necessary as the so-called “guns to Telstra’s head” have been removed in the bill. There is no longer an automatic prohibition on the acquisition of spectrum if Telstra does not structurally separate and divest its interest in its HFC network and Foxtel. The bill has been amended to give Telstra sufficient regulatory certainty to take a firm proposal to its shareholders to structurally separate by allowing Telstra to acquire specified bands of spectrum unless the minister determines in a legislative instrument otherwise. The bill also does not require Telstra to divest its interest in Foxtel, but still provides a framework for Telstra to voluntarily divest its interest in Foxtel and its hybrid fibre coaxial cable network. In the event that Telstra does not proceed with structural separation, the minister could take into account Telstra’s ownership of Foxtel and HFC networks in determining whether to use the powers in the bill to prevent Telstra from acquiring certain spectrum to address Telstra’s power in telecommunications markets.

I find it somewhat extraordinary that here we have a situation where Telstra itself, the company, is no longer out there campaigning saying, ‘This is a big priority, we’ve got to remove these provisions from the bill,’ and yet the opposition seem determined to continue to persist with trying to remove these provisions, the excluded spectrum regime, from this legislation. Frankly, it defies logic when the company involved, whilst of course it would like to operate in a way which was free of constraints on regulation, as most corporate entities would in an ideal world for them, has accepted that the government have acted responsibly in forwarding this amended piece of legislation before the House. I therefore urge the parliament to reject these coalition amendments to this important piece of legislation that is before the House.

4:59 pm

Photo of Tony WindsorTony Windsor (New England, Independent) Share this | | Hansard source

I will not be supporting the amendments. I believe that today will be a fairly significant day in our history, with the structural separation arrangements being put in place and the movement towards the National Broadband Network. I think it is high time that we move forward, into the future, rather than perpetuate the problem that we have had for over a decade now: the interminable argument about where our telecommunications system is going in a nation of this size and magnitude. I am very pleased to see what is happening. Obviously, in relation to the structural separation issues, we are repairing something that should have been repaired a long time ago.

I would also pay a compliment to the member for Wentworth, not only in relation to this part of the bill but in terms of his shadow ministry. Even though I am not likely to agree with him about the broadband arrangements that he is proposing, he has displayed enormous tenacity in putting forward his arguments. I have been known to say to him that he has become a stalker on this particular issue, but I compliment him for his tenacity in engaging in what he obviously believes is a position that he needs to uphold. Unfortunately, on the broader issue of the broadband arrangements, the Leader of the Opposition has taken a position of denial, in a sense. He believes that the National Broadband Network is a dog and should not be supported. I do not agree with that view at all. I would like to place on the record, because I was unable to speak earlier in the debate, that I believe that the fibre technology we are talking about is quite possibly the greatest piece of infrastructure for country Australians that I will have seen as a member of parliament.

We should not be finding objections via the Productivity Commission and other arrangements. We would really have difficulty valuing future uses of this technology and making a realistic economic assessment, anyway. Rather than going down that track and maintaining opposition to change, I think it is time we actually embraced the future. The future is fibre, will be fibre and should be fibre, and country Australians should, in the main, be allowed to share in that technology. I support the government in relation to structural separation. I understand the reasons it is being done. I understand the relationship between Telstra, the National Broadband Network and the government, and I will be supporting the government’s view on this and hence will not be supporting the opposition’s amendments.

5:03 pm

Photo of Robert OakeshottRobert Oakeshott (Lyne, Independent) Share this | | Hansard source

My position on both structural separation and the future of ICT generally, and broadband in particular, for regional Australia has not changed. The concept of getting away from dial-up and towards more reliable and affordable services in regional areas, such as the mid-North Coast of New South Wales, is a welcome one. I get the concept of a broadband rollout, as presented by the government. I have consistently said that there is fertile territory for all of us on issues around cost and delivery. They are both areas where members of parliament of all persuasions need to keep executive government honest and accountable, as all members of the Australian community need to keep members of the executive as accountable as possible.

My position on structural separation has not changed since previous attempts at legislative reform. I think that we are making an unfortunate incursion into shareholder rights and that we are doing it in an ugly way. However, I do get why we are doing it and the greater national interest and public interest of doing it. In an ideal world this would have been done at the start: separation would have been resolved early and shareholders would have made decisions accordingly. Unfortunately, it was not and we therefore have to do this to some degree at the expense of shareholders who may have made decisions in good faith without this decision on their radar. But I still get the point of doing it and will endorse the government getting on with it. I note that this is also now the position of David Thodey, and of Telstra generally. He is now endorsing this legislation in general terms.

I also want to put on the record some comments in relation to the proposed amendments. I endorse the comments of the member for New England that the member for Wentworth has done a significant job in the last eight weeks of very subtly but strategically moving the coalition position to a point where we now have a policy contest on cost and delivery. I endorse the comments that were made previously in that regard.

If the shadow minister is going to deal with merits review and procedural fairness together in the same amendment—and I do not see procedural fairness identified in any of the amendments in the list—I will be interested in supporting that one. However, in regard to 4G and spectrum issues, I do not buy the gun-to-the-head argument and I do not think that it is in the national interest that we try and defend Telstra shareholder rights over and above some national interest outcomes that we are trying to achieve through this legislation.

As this suite of legislation goes through over the next four to six months, we are all in a difficult position. Anyone who does give a damn about better ICT and broadband services for regional Australia will want to see action in this area sometime soon, and preferably in the next three years. At the same time, we do not want to slow down the delivery of that in the quest for efficient government. That is the bind that I think we all find ourselves in if we are genuine about trying to achieve the right policy outcome.

In the coming vote on the amendments you will see my support in one instance for the shadow minister. That is because I see such support as delivering a potential efficiency gain on the questions of cost and delivery. However, in other regards you will see me, on what I think are going to be three other divisions, support the government, because in my view the national interest of the concept is the priority in those instances.

5:08 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

If I can respond to the remarks made by members that have just spoken, let me first thank the members for New England and Lyne for their kind words. I would rather have had their kind votes; however, their kind words are appreciated.

The member for Lyne said that this is an ugly way to go about achieving structural separation. He is absolutely right. It is also unprecedented, unjust and unnecessary, and it comes with an enormous cost to the taxpayer that will not deliver what we seek to achieve with telecoms reform, which is universal and affordable broadband. There is no question that the NBN can achieve broadband services across Australia. Universality is, perhaps, the easy part. Affordability, however, is really looming as one of the biggest issues. Honourable members are keenly aware of the digital divide and the fact that internet services are more readily available at higher speeds in the cities than they are in the regions. It is one of the reasons we had a scheme to address that in 2007. If we had been re-elected, it would all be in place. It is a pity the Labor government did not pick that up. But the biggest digital divide—overwhelmingly the biggest digital divide—is based on income. The difference between home internet usage in the metro cities compared with the rest of Australia is 76 per cent in the cities to 63 per cent or thereabouts everywhere else. Internet usage in households with an income of $40,000 a year or less is 43 per cent, whereas for households with incomes over $120,000 it is 95 per cent, and in fact once you move into middle incomes it rapidly gets up very close to the high 80s and 90s.

The real digital divide is based on income and affordability, and this scheme is massively expensive. It is creating a monopoly, and the amendment that we will come to under the heading of competition is absolutely critical. The government knows that it is creating a monopoly that is obnoxious to the provisions, purpose and intent of the Trade Practices Act and our consumer and competition act, and that is why it wants to exempt it from that act, to deem it to be authorised without any proper inquiry. The OECD was scathing in its criticism—and the OECD was mediating the views of the Treasury, I might say—of the way in which the NBN/Telstra deal prevents the use of the HFC cable network, which is a potentially competitive cable network passing 30 per cent of Australian households, being used to compete with the NBN. Were that allowed to compete, as I have no doubt it would were this transaction to go before the ACCC under section 51 of the Trade Practices Act, you would have real competition and, inevitably, downward pressure on internet access prices.

As the OECD keenly observed, the only justification for eliminating competition is to support the economics of the NBN. But we have to ask ourselves the question: what are we trying to do? Are we trying to create a massive government owned monopoly and then use all of the power of government and parliament to prevent anyone competing with it so it can charge higher prices? That is what state governments used to do years ago and were roundly criticised for. This is what we have had 25 years of microeconomic reform to turn back, and now we are turning back the clock. This is like a state government in the old days having a state government owned railway and passing laws to prevent people carrying goods on trucks, on the road, so it did not compete with the railway. That is what this is about and the simple bottom line here is that yes, we agree on separation and yes, we agree on universal and affordable broadband, but it has never been established that this is either the fastest or the most cost-efficient and effective way of delivering it. And that is why, both through these amendments and indeed through our proposed reference to the Productivity Commission, we are trying to impose some rigour and accountability on this whole sorry saga of the NBN.

5:13 pm

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

I think from the start we need to be very clear about what the legislative rationale is in these parts of the bill that the opposition is seeking to amend. What we are talking about here is the digital dividend—the liberalisation of the sweet spot of the radio communications spectrum, which has untold, unknown value. Importantly, we only have one chance to get it right. We have one chance to ensure that this spectrum is allocated in a way that will take us beyond the 21st century. If we get this wrong now, it means that we will simply perpetuate all the regulatory failures of the past and thereby simply ensure that they continue into the future to the detriment of consumers.

Rules in auction processes on who can bid for spectrum and in what amounts are not novel. The ACCC has long had a statutory involvement in that. Other countries who are doing their digital dividends right now have had rules on their spectrum management. Yes, the legislation does incentivise Telstra to take action on separation before precluding its ability to bid for long-term evolution spectrum. But, as the minister has said, this bill no longer has an automatic prohibition on the acquisition of spectrum if Telstra does not structurally separate and divest its interests in the Foxtel network. So the opposition’s amendment here is completely misguided. The strong incentive regulation element is still there. I query whether, if the opposition had their way on this point, they would permit Telstra to take its already significant market power in the customer access network and impose that on the 21st century networks that will be built, simply entrenching the already broken market structure rather than transforming it. The member for Wentworth talked about turning back the clock. What he is talking about here is perpetuating an existing regulatory failure and bringing it into the 21st century.

Even the chief technology officer of Telstra knows that spectrum cannot do what fibre can do. Spectrum will always be complementary, never a substitute. Until someone, as I said yesterday, finds something that is faster than the speed of light, you will get nothing better delivered than under fibre. It is simply something that spectrum will not be able to deliver, because it is a shared resource. The physics will tell you that it is a shared resource that will never be able to deliver what fibre can deliver. Once the backbone network is built, what then will need to be done is changing the electronics at each end. Once it is built, you will have the conduit for doing anything in the future—applications and services that have not even been invented yet.

On the issue of picking winners, I note that it is the opposition that is choosing to pick winners here by trying to give wireless and HFC a leg up. That is the great paradox of this debate. I will also say, as someone who has been talking to people in the industry for some time about this, that the industry welcomes the way that this bill has been structured so that broadband has been dealt with in a holistic way, not a hotchpotch of different parts of wi-fi and copper such as the coalition took to the last election and still has as its policy today. Rather, the government is choosing to address all technologies and issues to do with broadband. By dealing with these in a holistic way, we can structure a regulatory system that delivers a holistic solution to the issue of the lack of broadband accessibility in Australia.

The member for Wentworth talked about the digital divide, and we had this conversation yesterday. It is about affordability. The affordability problem arises because of the failures in the existing regulatory structure. Firstly, there has been a lack of infrastructure based competition. There is no denying that there has been no infrastructure, let alone infrastructure competition, in many parts of Australia—not only in rural and regional Australia but in metro parts of Australia too. In my own electorate, I receive calls, emails—well, not so much emails, because they would becoming very slowly—and representations from people in new greenfields estates who simply do not have broadband. They cannot access it. The only choice they have is probably some wireless mechanism which would cost them a great deal of money. They cannot understand why they cannot get the same treatment as everyone else.

The member for Wentworth talked about the NBN taking away the investment in greenfields. The NBN is the greenfields investment. It is the only investment that is going into greenfields. For those reasons, these parts of the amendments that have been put up should not be supported. (Time expired)

5:19 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

I will just respond briefly to a couple of the points the member for Greenway made. She said that there had been in Australia a lack of infrastructure competition. In terms of fixed line, that is undoubtedly true. There has been some, but there is the opportunity now to have real and substantial infrastructure competition at the fixed line level. But that opportunity is being cancelled out by this legislation and the agreement which it supports whereby Telstra and in due course Optus and others, like Actew here in Canberra, will be prevented from using their cable networks to compete with the optical fibre network of the NBN.

With great respect to the honourable member, her proposition that HFC cable cannot compete with optical fibre is simply wrong. The reality is that technologies compete right across the board. In the United States there is competition in many markets between ADSL and twisted copper pairs, DOCSIS 3.0 standards and HFC cable—just as we have here—and GPON services and optical fibre networks, not to speak of competition from satellite and wireless. The picking of technological winners is a big mistake pretty much wherever you are, whether you are in the public or the private sector. From a government, political and policy point of view, we should be stipulating an objective and then being technologically agnostic about it.

The honourable member talked about, as a number of her colleagues have done today, the lack of access in urban electorates. They are generally outer urban electorates where, because of network decisions made in the past, there is architecture that makes it difficult, if not impossible, to deliver high-speed broadband over twisted copper pairs. These are pair gain systems and RIM systems. These are all generically black spots in internet access in the cities. Some of the Labor members have said today, ‘There are fast speeds in the honourable member for Wentworth’s electorate, but there are not so many fast speeds in my electorate.’ If that is so then surely the objective should be, in a cost-effective way, rectifying the black spots in the cities so that everybody has the same speed as the best speed in the cities and making an investment in rural electorates with the benefit of a substantial government subsidy, as both sides agree is required and appropriate.

The paradox is that nobody contends that nowhere in Australia is there adequate broadband. Not even the honourable member for Greenway is saying, ‘Nowhere in Australia is there adequate broadband.’ Yet this NBN is based on the premise that nobody has adequate broadband—not even the fastest areas in our cities—and we need a complete overbuild, a completely new network.

The issue of competition at the facilities level is absolutely critical. The OECD has made that point as strongly as it could, citing numerous references in the literature. There is no better way to keep prices down than to have competition between fixed line providers. That has been the universal experience. It is one of the things people have criticised Australia for not having. So here, when we are at the point of being able to achieve that, the government uses legislative power to prevent it from occurring, and it does so simply because it wants to create this massive government monopoly. You cannot stand in the way of the laws of physics; you cannot stand in the way of the laws of economics. If you have a massively overcapitalised, heavily capitalised, government monopoly or any monopoly, it will inevitably be drawn, compelled, to charge higher prices to recover an investment. The only thing that can keep it honest is competition. That competition is being precluded, prohibited, under this legislation and it will have the inevitable consequence that the digital divide—the divide in internet access between rich and poor—will get wider and we will have spent $43 billion of taxpayers’ money to make it deeper and more enduring.

5:24 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

I rise to respond to the comments of the member for Wentworth, even though he did not actually address in that contribution the reasons why he has moved these particular unnecessary amendments. But he has raised some comments that do need a response from the government. He speaks about competition and competition being excluded from the National Broadband Network. Of course, what he ignores is the fact that the NBN is about the wholesale market and the competition will be in the retail sector. We are already seeing that competition in Tasmania as the NBN is being rolled out. It is a bit like the situation in my portfolio, under which the ARTC owns the tracks on which the trains travel. The trains are owned by different corporate sectors. That is where the competition comes in; that is where the market operates. Unless you have the track—in this case, the fibre-optic network to the home—the foundations, the backbone, you simply will not be able to move forward in a way which will take Australia into the 21st century.

The opposition had 18 plans when they were in government. They have had two plans since. So we have 20 plans, and when it all boils down it comes down to ‘leave it to the market and it will sort itself out’. The market did not sort it out and we have continued to go backwards when comparing our competitive advantage with that of our neighbours, whether it be Korea or Japan or Hong Kong—or New Zealand, for that matter. We have continued to go backwards when it comes to broadband speeds on what is the most important single piece of infrastructure for the 21st century.

The member for Wentworth speaks about turning back the clock. We are actually taking the courageous decision to move forward into the 21st century. That is why we are so committed to the National Broadband Network. That is why structural separation needs to occur through this legislation. The member for Wentworth says that the opposition support structural separation. Why didn’t they do it when they privatised Telstra? That is when it should have happened. That would have been the appropriate mechanism, and the member for Wentworth knows that that is the case, knows that that was the right thing to do. I appreciate that he agrees with the fact that that is an appropriate policy mechanism. We have not talked about it. This legislation is actually doing it.

I agree with the member for New England: this is absolutely vital, historic legislation before this parliament. It is vital because it forms the foundation stone of our commitment to deliver fast, high-speed broadband to Australians wherever they live—whether it be in cities in electorates such as Wentworth or Grayndler, or whether it be in Armidale or Kalgoorlie. People in those places should have the same access as people in Rose Bay and Marrickville. That is what the National Broadband Network is about—an important reform.

The member for Wentworth says it is not about regions and cities. He has discovered class and the fact that incomes make a difference. Of course incomes make a difference in terms of access to computers, access to new technology and access to services. Of course that is the case. But the member’s point could apply to any purchase of services or infrastructure in the home. The fact is that the wealthier you are the more access you have. As members of parliament we are able to deliver it for ourselves and our families much more so than many people who live in our electorates. This is historic legislation that is about putting in place our commitment. It is about time the opposition got on board with the program, because they know that this is vital infrastructure for the 21st century.

Question put:

That the amendments (Mr Turnbull’s) be agreed to.

5:39 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

by leave—I move opposition amendments (18) to (23), (25) to (32), (41), (42) and (44):

(18)  Schedule 1, item 30, page 11 (line 27), omit “writing”, substitute “legislative instrument”.

(19)  Schedule 1, item 30, page 12 (line 4), omit “written”, substitute “legislative”.

(20)  Schedule 1, item 30, page 13 (lines 17 and 18), omit “the associated provisions”, substitute “subsection 577BC(2)”.

(21)  Schedule 1, item 30, page 13 (line 24), omit “the associated provisions”, substitute “subsection 577BC(2)”.

(22)  Schedule 1, item 30, page 13 (lines 28 to 32), omit subparagraphs (22) and (23).

(23)  Schedule 1, item 30, page 14 (lines 3 to 5), omit the definition of associated provision.

(25)  Schedule 1, item 30, page 15 (line 7), omit “writing”, substitute “legislative instrument”.

(26)  Schedule 1, item 30, page 15 (line 13), omit “writing”, substitute “legislative instrument”.

(27)  Schedule 1, item 30, page 16 (lines 7 to 12), omit subsections (9) and (10) including the subsection headings.

(281)       Schedule 1, item 30, page 18 (line 9), omit “writing”, substitute “legislative instrument”.

(29)  Schedule 1, item 30, page 18 (lines 14 to 16), omit subsections (8) and (9).

(30)  Schedule 1, item 30, page 18 (line 17) to page 25 (line 5), omit section 577BA.

(31)  Schedule 1, item 30, page 25 (line 8), omit “writing”, substitute “legislative instrument”.

(32)  Schedule 1, item 30, page 25 (lines 22 to 27), omit subsections (3) and (4) including the subsection headings.

(41)  Schedule 1, item 31, page 59 (line 9), omit “make a written”, substitute “, by legislative instrument, make a”.

(42)  Schedule 1, item 31, page 63 (line 18), omit subsection (6).

(44)  Schedule 1, item 33, page 75 (line 34) to page 76 (line 5), omit the item.

These are the amendments referred to on the amendment sheet under the headings ‘disallowance of instruments’ and ‘competition’.

I will deal briefly with the matter of the disallowance of instruments. In section 577A of the bill, there is a new provision relating to the manner in which an undertaking from Telstra to effect a structural separation may be accepted. Such an undertaking would, under this provision, have to be considered by the ACCC, although not under the purview of section 51—so it would not be considered by the ACCC for the purpose of determining whether or not it was anticompetitive. This, of course, begs the question as to why the ACCC would be involved. But, putting that aside, the ACCC is asked, under this provision, to take into account certain matters which may be specified to it by the minister in writing. The purpose of the amendments referred to on the amendment sheet as ‘disallowance of instruments’ is to replace ‘in writing’ with the words ‘in a legislative instrument’ and this happens at a number of places through the bill.

This is simply a question of accountability. The amendments would ensure that any ministerial direction to the ACCC regarding the criteria for acceptance of a functional separation—or indeed a structural separation, because the provisions also apply to the section in the bill dealing with that—would be a disallowable instrument and therefore subject to the scrutiny of parliament.

The second set of amendments that we are considering in this group are those referred to on the amendment sheet as relating to competition. This is probably the most important part of this group of amendments. These amendments are designed to ensure that the normal operation of the Competition and Consumer Act, formerly the Trade Practices Act—the key legislation in this country protecting the interests of consumers and promoting competition—would apply to the deal involving Telstra and NBN Co. The amendments would, among other changes, excise new section 577BA. New section 577BA is at page 18 of the bill and basically provides that a contract between the NBN Co. and Telstra would, by virtue of this statute, be authorised for the purposes of section 51 of the Competition and Consumer Act. In other words, without our amendments, that contract between NBN and Telstra would not be considered by the ACCC. Why is the government seeking to do that? It seems extraordinary that a government that has talked so much about the importance of competition in telecommunications would actually legislate to take its own new monopoly out of the purview of the ACCC.

Why are they doing that? They are doing that because a key part of this deal is an obligation on Telstra, as I said earlier in this debate, not to use its HFC cable to compete with the NBN. It is a key part of the deal because the government knows, and NBN Co. knows, that if they allow facilities based competition it will result in lower prices and better deals for internet users. That, of course, would undermine the already tragic economics of the NBN.

The minister compared this earlier to a rail track and said, ‘If you have competition for use of the rail track, you don’t need to have two rail tracks.’ The fact of the matter is that if you have a monopoly provider of any service, be it wholesale or retail, that monopolist will seek to attract a monopoly rent. That is why we are opposed to monopolies; that is why we have legislation to regulate monopolies; that is why we have the elaborate provisions of the Competition and Consumer Act. But, without our amendments, those provisions would now be irrelevant to this anticompetitive transaction, the consequence of which can only be—you cannot suspend the laws of economics—higher prices, less affordability and less accessibility to the internet for Australians. (Time expired)

5:44 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

The government will be opposing these amendments. We oppose them for good reason. Firstly, with regard to the issue of the Competition and Consumer Act, the proposed amendment is simply unnecessary. The bill already provides the ACCC with powers to scrutinise the Telstra and NBN Co. agreement when it considers Telstra’s structural separation undertaking. So it is already there. This is entirely appropriate, as it removes any need for a separate authorisation inquiry, while still ensuring that there is appropriate scrutiny by the ACCC of the arrangements between Telstra and NBN Co. The conduct that could require authorisation includes the decommissioning of the copper network, the progressive migration of customers to the National Broadband Network and the restriction on the use of Telstra’s hybrid fibre-coaxial cable network. The bill is designed to provide proper competitive scrutiny but also to provide the confidence that is necessary for Telstra to get on with the job. The fact is that those opposite say that they do not have any disagreement with this—or some of them do; the member for Wentworth says that he kind of gets it that broadband is pretty important but it is good enough if you live in his electorate. But he does not then take that to its logical conclusion, because he moves amendments that would simply destroy the ability of the National Broadband Network to move forward.

The second issue which has been raised is whether the ministerial direction to the ACCC should be disallowable by parliament. The government’s strong view is that the risk of disallowance and of this opposition playing politics with this issue would cause uncertainty for Telstra to structurally separate. What the opposition are putting up is actually a barrier to reform. Structural separation is in the national interest. The opposition’s proposal undermines the full structural separation of Telstra. Under the Legislative Instruments Act 2003, there are three key requirements that apply to legislative instruments: they are subject to parliamentary disallowance; they are published on the Federal Register of Legislative Instruments to ensure their availability to the public and industry; and they are subject to sunsetting after 10 years. Sunsetting is not of relevance here, as each of the instruments in question will cease to have effect before the 10-year period provided for. For most of the instruments in question, there is a requirement for publication on the department’s website, meaning publication on the register is not necessary. In each case, there are sound reasons for not making these instruments subject to parliamentary disallowance. That is why we are opposed to these amendments.

It is very clear that the opposition, in moving these amendments, are once again doing everything they can to stop the National Broadband Network being able to move forward, to stop structural separation actually occurring, even though they acknowledge how important it is. I ask the House to reject the amendments moved by the member for Wentworth.

5:48 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

The Minister for Infrastructure and Transport has just told the House that the undertaking about structural separation will be considered by the ACCC. That is true. I mentioned that earlier. But the ACCC will not be considering that undertaking in the context of competition. The only reference to competition is the requirement, in proposed section 577A(3)(a), that the undertaking provides for equivalence in relation to the supply of Telstra to its customers. What that means is that the ACCC simply has to be satisfied that the NBN will charge like customers like amounts. It does not raise or consider the problem that the NBN is a monopoly, part of a deal which excludes competition from other facilities, such as the HFC network and, no doubt, other telcos that will be asked to do a similar deal with the NBN. It does not consider the monopolistic consequences of that; namely that, while the NBN may be charging equivalent prices to its customers, those prices will be excessively high. If they are overcharging everybody, that will pass the test. So this really misses the point. This authorisation is no substitute for the competition provisions of the Trade Practices Act.

Next is the issue about accountability. I wonder how the Independent members feel about the new paradigm. The minister sounded like he was back in the old days, when he had a big, solid working majority here. He said that the risk of disallowance—that is, the risk that either house could disagree with the government—would create uncertainty and involve ‘playing politics’, to which the honourable minister is a complete stranger! The government have entered into a massive, unprecedented commitment to build an uncosted, unanalysed National Broadband Network. They have then entered into an anticompetitive contract with Telstra. Having done both of those things, they then say that those agreements and those investments that they are proposing to make are the sole object of policy, and any scrutiny, any check, any balance—anything which prevents the government getting its way—creates uncertainty. I thought that in the new paradigm we were all in favour of accountability.

The fundamental point—and this is a matter that this House has to reflect on very seriously—is that what we have is the creation of a massive government owned telecoms monopoly. We have a government that is seeking to use the power of the parliament to ensure that that monopoly has nobody competing with it. Therefore, it will be able to charge higher prices—indeed, the McKinsey implementation study proposed that price increases in real terms be imposed on customers every year for the next decade. That is a complete reversal of the experience that we have had.

When did we decide that the competition laws of this country, which we all regard as being so important to microeconomic reform to an efficient modern economy, should not apply to the biggest monopoly in one of our most important sectors? This is unprecedented. It is extraordinary. It is reprehensible that the government is creating this massive monopoly and excluding competition with a combination of threats, guns at heads, legislative power and $11 billion, and then, just in case this might offend the competition laws of the country, providing by statute that those laws do not apply.

5:53 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

It is important that the government respond to the assertions of the member for Wentworth regarding what criteria the ACCC will apply under section 577A. It is important that this nonsense put up by the member for Wentworth be put to bed. The fact is that, in accordance with standard administrative law requirements, the ACCC must have regard to the objects of the act. That is the first point to make. The second point to make is that subsection 3(i) of the Telecommunications Act makes it the main object of the act to provide a regulatory framework that promotes the long-term interests of end users and the efficiency and international competitiveness of the Australian telecommunications industry. These are entirely appropriate criteria for the ACCC to apply when considering a structural separation undertaking that will result in fundamental structural reform of the telecommunications industry. It is naturally the case that, being the competition regulator, the ACCC will also consider the competitive impacts of Telstra’s structural separation undertaking.

Let there be no doubt that what the opposition are about here is putting up straw arguments that simply do not apply to the legislation that is before this House. If these amendments are successful there will be very real implications for whether structural separation can occur. That is a fact. They know that this is the case. The member for Wentworth was given the task by the Leader of the Opposition of wrecking the National Broadband Network. In the amendments that are before the House today we can see that the member for Wentworth on this occasion is being loyal to the Leader of the Opposition, because that would be the consequence of the carriage of these amendments.

It is important that we take a step back in considering this legislation to look at what we are aiming to achieve here, which is high-speed and affordable broadband for all Australians. That will improve living standards, make us competitive and give us an edge in our region. Those opposite failed with all their approaches. They failed on the issue of structural separation. This legislation is progressing that. It is worthy of support. The sort of nonsense being put up by those opposite is simply aimed at undermining this legislation. That is why these amendments should be rejected out of hand.

5:57 pm

Photo of Robert OakeshottRobert Oakeshott (Lyne, Independent) Share this | | Hansard source

I want to put on record some views on these amendments. I accept the government’s position on them. I do that as a lover of competition and a lover of the role that the ACCC plays in regulating the market mechanisms in place in many Australian marketplaces. I also make the point that this does not reflect poorly at all, in my view, on that much overused and almost cliched statement, ‘the new paradigm’. We can in this place legislate and/or regulate anywhere on anything at any time, to steal a line from the Goodies. Our moving for structural separation long after the initial restructure and privatisation of Telstra is an example of how, if there is a need in the future to address issues to do with increasing competition and producing better national interest outcome, we as parliamentarians can do so. We are not losing that right by either supporting or rejecting changes to parliamentary disallowance periods. The issue here is one that was addressed to my satisfaction by the response just given by the minister. On this particular suite of amendments I will again stick with the government. But I will make two points under the theme of competition, because that is at the heart of what the shadow minister is trying to achieve.

I would love to have at my disposal, right here right now, a business case from NBN Co. It is unfortunate that we are having this debate as legislators who are trying to make decisions about issues such as competition while deep in the bowels of government, despite nearly two months of public rhetoric saying that a business case would be available, it remains unavailable to us as legislators. I think it is disappointing, when this first piece of legislation is coming up that is relevant to decisions for all of us about the detail of the concept of national broadband, that we do not have that business case available so that we can make decisions based on merit. I understand what a big document it is, and I understand that it would take time to read and consider it. I understand the processes of government, I understand the processes of cabinet, but if we are going to invest in the new working parliament then that needs to be considered as a valued part of the processes of government. If we are going to make decisions, particularly on the crossbenches in a tight parliament, then we need to be given the opportunity to make those decisions on merit. On this particular issue of competition, it was very difficult to make that decision without that business case from NBN Co. at our disposal. So, taking the opportunity to put on the record my thoughts on this amendment, I also ask the government to expedite the business plan. It is necessary for the public debate to be a real debate and for truth to be separated from fiction.

The other point I make about accountability to drive competition is that we are all struggling with the issue of a Telstra deal being done at the front end that will be presented to shareholders at the back end, with a legislative reform package in the middle. That is a challenge. It would be valuable to receive as much help from government as possible by making as much information available as possible on what the deal was at the front end and what will be presented to shareholders at the back end to achieve the right outcome. (Time expired)

6:02 pm

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

The shadow minister, the member for Wentworth, is quite misguided in his understanding of what the ACCC will and will not be able to do. The ACCC will be able to undertake a competition analysis, and it will do that understanding that telco infrastructure, even at its most basic level, exhibits what economists call natural monopoly characteristics—things like high sunk costs, network effects and vertical integration. The role of the regulator is to ensure that that is regulated effectively. I note that Graeme Samuel of the ACCC backs up what the minister has said on the role of the ACCC. I quote from iTnews of 25 October this year:

ACCC chairman Graeme Samuel has outlined the competition regulator’s desire to have final say on undertakings submitted by Telstra and NBN Co, without facing the prospect of court appeals.

Samuel goes on to say:

Turnbull—

the member for Wentworth—

had suggested that proposed legislation put forward by the Government ‘exempted [the NBN] from the provisions of the Trade Practices Act.’

Samuel said the ACCC—which enforces this act—would not be exempt from studying these undertakings.

‘If you examine the legislation carefully, I don’t think that the NBN is subject to exemption from ACCC examination’, Samuel said.

And:

Samuel said the undertakings would be subjected to ‘very rigorous examination’ to ensure competition over several decades.

I will read one last quote on the issue of merits review for the benefit of the member for Lyne, which I will talk to when we get to those amendments. Graeme Samuel went on to say:

It should not be subject to any form of gaming, if you like, by seeking to have it taken on review to various tribunals and courts up the line.

The opposition has been peddling the notion of the elimination of competition and the creation of a new monopoly in NBN Co. I have heard the member for Wentworth come into this place and say that the government has to eliminate all competition for the NBN to be successful and will exempt the ACCC from determining whether this monopoly is in the public interest. The fact is that the ACCC, as I have said, will actually be tasked with approving Telstra’s structural separation undertaking under the government’s changes. Instead of exempting the ACCC from playing a role, the government has given the ACCC a central role in this whole process to ensure the restructure of the industry through the oversight of the structural separation of Telstra and the migration of connections to the NBN.

I will also say one thing about parts XIB and XIC of the Trade Practices Act. Like the member for Lyne, I love competition. I have spent most of my professional life working in the area of telco competition. NBN Co. will be subject to regulation by the ACCC under parts XIB and XIC of the Trade Practices Act, but it will not be the weak powers given to the ACCC in 1997 when the opposition was in power. The changes that are proposed here by this government will actually strengthen the role that the ACCC plays in the way it regulates Telstra and the NBN going forward by giving the ACCC what I have referred to as the up-front role in the process.

I continue to be fascinated by the fixation of the member for Wentworth with this notion of a new monopoly being created, when in fact what we are doing is getting a vertical disintegration of the sector. You cannot get anything more competitive than disintegration of the sector. There is widespread acknowledgment of those natural monopoly characteristics needing to be regulated. It is paramount, within the network architecture where you have the top layers, the content and applications, and the bottom layer, the network layer, that competition happens in those higher layers. You do that by disinfecting those higher layers by regulating at the wholesale level. Every liberalised country does it, and does it effectively, and is moving in that direction to ensure the most effective regulation at the wholesale level so that competition at the retail level can flourish.

This is certainly not some flight of fancy. The notion that you need to regulate as deep as possible into the network is something that I know the ACCC is very keen to pursue. Not only that but it results in what consumers want. It results in competition at the retail level that will ensure lower prices and that will lead to better price and non-price quality of services and a greater range of services and availability. This is what consumers want. If we regulate at the wholesale level, which is what the ACCC will do, we will see the benefits in the upper layers of the network architecture. So, far from the monopolisation that has been fixated upon, the fact is that disintegration will produce the results that consumers want.

6:07 pm

Photo of Ed HusicEd Husic (Chifley, Australian Labor Party) Share this | | Hansard source

I want to add some comments in this debate as someone who in a previous life closely watched from within the industry the impacts of regulation upon the industry and the ability of people to secure work in the industry. I have a deep and abiding interest in the future of the industry—the very debate we are engaged in right now. One of the issues that I have is that we have referred a number of times to the multitude of plans that were embarked upon by the other side when in government. In that array of plans was a recognition that leaving it to Telstra on its own would never satisfy the demands of consumers. We would never see the industry evolve if it was left on its own, which was why the former coalition government attempted on a number of occasions, through its 18 or 20 versions of a plan, to see us change the industry.

One of the things that I learnt watching from within the industry was that a litigator was a telco’s best friend. If left to their own devices, the telcos would use any avenue they possibly could to fight the decisions of regulators or competitors to advance the interests of competition in the industry. While zealously guarding themselves and saying that they needed to protect their own interests, we had armies of lawyers willing to engage at any point to frustrate the ambitions of regulators and government to inject more competition. We had 18 plans from the other side because the coalition was unable to progress this further.

Telstra decided that it did not want to invest further in its copper network. Telstra made the decision that if it did invest in broadband it wanted to see a greater return on that investment, about which the ACCC would then have reservations. Where did we get? Nowhere. I pick up on some of the contributions made by the member for Greenway when I support a stronger role for the ACCC into the future in the oversight of Telstra and NBN Co. We cannot remain stuck in the regulatory logjam that prevented the industry from moving forward.

If I can add another perspective, there are employees within Telstra—line workers and technicians—who for all their lives have been working basically on copper. We have an opportunity now to train those employees to move into the world of optic fibre and to be part of this rollout. Another thing I have said on the record is that it does not take much to convince Telstra to sack employees. I used to dread every analyst day because frankly that was the day they would announce further job cuts—not necessary cuts, as no-one could argue that Telstra did not have work; no-one could argue that those workers were not required on the front line, in call centres answering customer inquiries, or out in the network. Telstra would basically cut numbers to satisfy the share market.

Any further delay that we have in being able to move forward on this bill, or getting the rollout done, is a further delay in re-training those workers who otherwise will be lost from the industry. The union that I previously worked for demonstrated that 85 per cent of people who had been made redundant by Telstra were lost from the industry. We face a worsening skill shortage within the sector if we are unable to advance the training and re-training that will also be offered as part of this process and to bed that down.

My final remark refers to the member for Wentworth. I have enormous regard for his understanding of this area and I would never seek to parallel or match that in the sense that I know he has watched this area for some time. But I cannot believe that a person in his position could argue against or seek to frustrate this process further. His words of 26 October in the matter of public importance in this place are still ringing in my ears. He said he had ‘…very serious cause to reflect whether there is any prospect of there being a net benefit to our economy from this project.’ I find that astounding and cannot believe that in the course of debate something like that could be expressed. (Time expired)

6:12 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

Responding to the minister and the members for Greenway and Chifley, there is no dispute about the need for a separation of the customer access network from the retail business. Honourable members have been critical of decisions that were not taken in the past, and it goes back a very long time. Kim Beazley, I think, has pled guilty to an omission in that regard too. We are not dealing with history now; we are dealing with the present.

If the objective is to have a separation of the customer access network from the retail business, and if the objective is to provide affordable universal broadband across Australia, it is reasonable to ask: what is the most cost-effective way of doing that? We had a lecture today in question time from the Treasurer about the importance of ensuring that reducing Australia’s carbon emissions was done in the most cost-effective way. He was getting the assistance of the Productivity Commission and various other wise people to achieve that end. That is exactly what we are talking about today.

There is no point trying to pretend that I or the coalition are opposed to broadband or opposed to universally affordable broadband. There is also no point pretending that everybody is in favour of this. You have some of the leading competitive telcos in Australia—the Alliance for Affordable Broadband—expressing very grave reservations about this project and calling for there to be a cost-benefit analysis done by the Productivity Commission. These are not spokespeople for the coalition. These are competitive telcos—the sort of people that the member for Greenway may very well have had as clients in her legal career.

As far as the issue of competition is concerned, this cannot be brushed aside. Let me return to the OECD’s economic survey of Australia, published on the weekend. This is what they said at page 109. Talking about what government policy should achieve, they said:

… it should not trigger a weakening of competition in wholesale broadband services to protect the viability of the government project. An alternative to this picking-the-winner strategy would be to let the market guide choices between the various Internet service options on the basis of prices that reflect costs, factoring in externalities that ought first to be evaluated. To that end, it would be desirable to maintain competition between technologies and, within each technology, between Internet service providers. This would be consistent with the planned vertical separation of Telstra and with other aspects of the reform that seek to promote competition. To develop fibre optic networks more gradually than under the government programme would also allow a better assessment of the new network’s costs and potential benefits and the potential positive externalities.

And, as honourable members know, the OECD went on to recommend that there be a rigorous, independent, public, cost-benefit analysis for a major project of this kind. That is advice that the government is completely ignoring.

There is no point in honourable members sneering and snarling at the OECD as though they are a bunch of idiots. Not only is the OECD a leading economic and political institution in the world but this report has been written with considerable input—enormous input, as every member knows—from the Australian Treasury itself, so there are very real concerns about the way the government is proceeding with this. In terms of the red book, the advice to the incoming government, what were the two concerns that the Treasury flagged? One was the financial risk to the public balance sheet from such a massive, uncosted investment, because nobody has asked or sought to answer the question: can we achieve this policy objective in a more cost-effective way? And the second was the impact on competition, which is what the OECD has written about and what we are debating in the context of these amendments. So these are serious issues.

The proposition that the authorisation or the undertaking acceptance provisions in the bill are a substitute for section 51 is simply not correct as a matter of law or as a matter of policy. If the government thought that section 51’s provisions should be applicable to this, it would not be seeking to remove this transaction from the provisions of the Trade Practices Act. (Time expired)

6:17 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

The member for Wentworth says that the competition issues ‘cannot be brushed aside’. This is extraordinary from a political organisation, the coalition, which privatised Telstra without protecting competition, choice or service delivery, including in the bush. This is what Allan Fels said about competition and this legislation when he was asked about whether this legislation is a victory for the ACCC. He said this:

Yes and for consumer. This had to happen. The access law was very weak and it was introduced at a time when the government wanted to privatise Telstra, so it made it weak and kept it weak. And so the true objectives of policy weren’t achieved.

That is what Allan Fels had to say. He knows something about competition across the board. This is a coalition that took a public monopoly, turned it into a private monopoly and called it reform, at the expense of Australian consumers. So let us have none of this nonsense from those opposite about competition.

But you do not have to go to Allan Fels. This is what the now member for Bradfield had to say about competition in his book Wired Brown Land? I quote Paul Fletcher in that book:

In fixed-line telecommunications today we have the equivalent of Qantas owning all the airports. The result: competition is weak.

That is what the bloke who sits up the back—who gets questions on the NBN because the tactics committee do not want to give the member for Wentworth too many questions during question time—their expert, had to say about competition and their performance in government. So let us have none of this nonsense.

There were a range of issues raised that simply are not correct. The member for Wentworth has argued that prices on NBN will increase, but NBN Co. prices will be subject to ACCC regulation. Let us make that very clear: they will be subject to ACCC regulation. He quotes the OECD report. This is what the OECD report had to say about competition:

Calling the dominant operator’s vertical integration into question is also welcome, as it will stimulate competition in the DSL Internet sector, and it can be expected to yield substantial benefits …

The report went on specifically to talk about the fact that the market alone simply would not deliver the best outcome. It said that the NBN ‘will avoid the risk of a geographic digital divide as it will cover the entire population, whereas if it were done by the private sector it would be done more gradually and only to the most densely populated areas.’ My electorate would benefit. Wentworth would benefit. Lyne and New England would get done over.

That is the reality. It is that simple. And we know that that is the case. That is the way the market operates, not because Telstra’s board are good or bad people but because that is their fiduciary obligation: to maximise their return for shareholders. But the interests of the Australian public are different. There is a national interest here, a national interest test, and that is what the legislation before us here does.

The member for Lyne also raised the issue of NBN Co.’s corporate plan. As he knows, the company submitted the plan to the government just last week. The government is currently considering the document and will make a range of information from it publicly available in due course. NBN Co.’s business study confirms the findings of the implementation study—despite using different assumptions—that the NBN can be built on a financially viable basis with affordable prices for consumers.

The real issue here was perhaps best summed up by the member for Wentworth when he said:

The NBN is the answer to a problem that has not even been identified …

Well, if you do not know what the problem is, it is not surprising that you have no idea about what the solution is. The solution, moving forward, is this legislation. It should be supported and the amendments should be rejected.

6:22 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

I was very interested to hear the honourable minister quoting Allan Fels in endorsing the arrangements with the NBN, so he suggested. Because I had my trusty wireless iPad here, I was quickly able to discover that he was in fact giving an entirely misleading account of an interview Allan Fels gave to Inside Business on 4 October 2009. He quoted a little bit, as he often does, which was out of context. Allan Fels welcomed the changes to access legislation but then Allan Fels went on in this interview to say:

There are a lot of tricky questions; are we going to restructure Telstra now once and then soon after maybe restructure it again for the NBN?

ALAN KOHLER: What because the NBN will be a monopoly?

ALLAN FELS: Well, that’s a further concern. Obviously I would be quite concerned if all the main players now like Telstra and Optus and everyone got into the NBN and it had monopoly power. That is a real dilemma.

So, far from giving this a tick, Allan Fels was expressing exactly the same reservations that we have had about the monopoly power, and the minister and Independent members may want to reflect that the minister chose to quote selectively from that interview in a way to create a misleading impression of what Allan Fels’s views were.

Finally, we get back to this fundamental issue of competition and how important it is. The reality is that this will be a monopoly provider of fixed line services to the home. We have expressed concern about it, the OECD has expressed concern about it, telcos have expressed concern about it—there is real concern right across the board. Even Paul Budde, who is a real enthusiast for the NBN and a man that I do not think has ever agreed with me in his life, I saw was complaining that the plan for the points of interconnect was offensive because it reeked of the exercise of monopoly power. There are real competition issues here. We cannot kid ourselves. We cannot turn a blind eye to this, and that is why this deal, this transaction, should be subject to the jurisdiction of the ACCC and the provisions of section 51 of the Trade Practices Act.

Question put:

That the amendments (Mr Turnbull’s) be agreed to.

6:35 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

by leave—I move amendments (58) to (63) together:

(2)    Schedule 1, item 152, page 108 (lines 10 and 11), omit the item, substitute:

152 Subsection 152AV(1)

Omit “152AT or”.

152A Subsection 152AW(1)

Omit “152AT or”.

152B Paragraph 152AW(1)(b)

Omit “paragraph 152AT(3)(a) or”.

152C Paragraph 152AW(1)(c)

Repeal the paragraph

152D Paragraph 152AW(1)(e)

Omit “152AT or”.

152E Paragraph 152AW(1)(f)

Omit “152AT or”.

152F Paragraph 152AW(1)(g)

Omit “152AT or”.

152G Paragraph 152AW(1)(h)

Omit “152AT or”.

152H Paragraph 152AW(5)(a)

Omit “152AT or”.

152J Paragraph 152AW(5)(c)

Omit “paragraph 152AT(3)(a) or”.

152K Paragraph 152AW(5)(d)

Omit “paragraph 152AT(3)(a) or”.

152L Paragraph 152AW(5)(e)

Repeal the paragraph

152M Paragraph 152AW(5)(g)

Omit “152AT or”.

152N Paragraph 152AW(5)(h)

Omit “152AT or”.

152P Paragraph 152AW(5)(i)

Omit “152AT or”.

152Q Paragraph 152AW(5)(j)

Omit “152AT or”.

152R Paragraph 152AW(5)(k)

Omit “152AT or”.

152S Section 152AX

Omit “152AT or”.

(3)    Schedule 1, item 160, page 131 (after line 2), insert:

Subdivision G—Review of access determination by Tribunal

152BCX Application for review

        (1)    A person whose interests are affected by an access determination may apply in writing to the Tribunal for review of the determination.

        (2)    The application must be made within 21 days after the Commission makes the determination.

        (3)    The Tribunal must review the determination in accordance with section 152BCY.

152BCY Review of access determination

Orders

        (1)    On a review of an access determination, the Tribunal may order that the determination be affirmed, varied or revoked.

        (2)    If the Tribunal makes an order that the determination be varied or revoked, the Commission is taken to have varied or revoked the determination accordingly (other than for section 152BCX or this section).

        (3)    For the purposes of the review, the Tribunal may perform all the functions and exercise all the powers of the Commission.

Conduct of review

        (4)    For the purposes of the review, the presiding member of the Tribunal may require the Commission to give such information, make such reports and provide such other assistance to the Tribunal as the member specifies.

        (5)    For the purposes of the review, the Tribunal may have regard only to:

             (a)    any information given, documents produced or evidence given to the Commission in connection with the making of the access determination; and

             (b)    any other information that was referred to in the Commission’s report mentioned in subsection 152BCH(1) or in any reasons for making the access determination that the Commission published.

Time period for review

        (6)    The Tribunal must use its best endeavours to make an order under subsection (1) on or before the action date for the review.

        (7)    If the Tribunal is unable to make an order by the current action date, the Tribunal must, by notice in writing, set a later date as the action date.

        (8)    The Tribunal must:

             (a)    give a copy of the notice to each party to the review; and

             (b)    publish the notice on its website and in a newspaper circulating generally throughout Australia.

        (9)    In this section:

action date, in relation to a review, means:

             (a)    the day 90 days after the Tribunal receives the application for review; or

             (b)    a later date set under this section.

(4)    Schedule 1, item 160, page 131 (lines 30 to 32), omit subsection (6).

(5)    Schedule 1, item 160, page 140 (after line 4), insert:

Subdivision E—Review of binding rules of conduct by Tribunal

152BDM Application for review

        (1)    A person whose interests are affected by a set of binding rules of conduct may apply in writing to the Tribunal for review of the rules.

        (2)    The application must be made within 21 days after the Commission made the rules.

        (3)    The Tribunal must review the decision in accordance with section 152BDN.

152BDN Review of binding rules of conduct

Orders

        (1)    On a review of a set of binding rules of conduct, the Tribunal may order that the rules be affirmed, varied or revoked.

        (2)    If the Tribunal makes an order that the rules be varied or revoked, the Commission is taken to have varied or revoked the rules accordingly (other than for section 152BD or this section).

        (3)    For the purposes of the review, the Tribunal may perform all the functions and exercise all the powers of the Commission.

Conduct of review

        (4)    For the purposes of the review, the presiding member of the Tribunal may require the Commission to give such information, make such reports and provide such other assistance to the Tribunal as the member specifies.

        (5)    For the purposes of the review, the Tribunal may have regard only to:

             (a)    any information given, documents produced or evidence given to the Commission in connection with the making of the rules; and

             (b)    any other information that was referred to in the Commission’s report mentioned in subsection 152BCH(1) or in any reasons for making the access determination that the Commission published.

Time period for review

        (6)    The Tribunal must use its best endeavours to make an order under subsection (1) on or before the action date for the review.

        (7)    If the Tribunal is unable to make an order by the current action date, the Tribunal must, by notice in writing, set a later date as the action date.

        (8)    The Tribunal must:

             (a)    give a copy of the notice to each party to the review; and

             (b)    publish the notice on its website and in a newspaper circulating generally throughout Australia.

        (9)    In this section:

action date, in relation to a review is:

             (a)    the day 90 days after the Tribunal receives the application for review; or

             (b)    a later date set under this section.

(6)    Schedule 1, item 177, page 152 (lines 25 and 26), omit the item, substitute:

177 Subsection 152CE(1)

Omit “152BU(2), 152BY(3),”.

177A Subsection 152CF(1)

Omit “152BU(2), 152BY(3),”.

177B Paragraph 152CF(1)(b)

Omit “152BU(2) or”.

177C Paragraph 152CF(1)(c)

Omit “152BU(2) or”.

177D Paragraph 152CF(1)(d)

Omit “152BY(3) or”.

177E Paragraph 152CF(1)(e)

Omit “152BY(3) or”.

177F Paragraph 152CF(5)(a)

Omit “152BU(2), 152BY(3),”.

177G Section 152CG

Omit “152BU(2), 152BY(3),”.

(7)    Schedule 1, item 212, page 167 (lines 7 to 14), omit the item.

These are the amendments which are referred to as merit review and procedural fairness. There has been a great deal of criticism over the years of Telstra using lawyers, talented law firms like the one the member for Greenway used to be a partner of, to challenge—

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

Ms Rowland interjecting

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

You wished you had the Telstra account—okay. As I was saying, there has been a great deal of criticism over the years of Telstra using lawyers to challenge access decisions made by the ACCC. The mechanism that was used has been summarised as being ‘negotiate, arbitrate’. That has been replaced now with a more prescriptive approach known as ‘set and forget’. We support those changes. However, it is important not to completely loose sight of issues of justice and fairness and to remember that it is one thing to say that a corporation is using lawyers to gain decisions, that is fine to use that description; but, if to remedy that, you take away that corporation’s rights—in other words, if you literally throw the fairness, natural justice baby out with the bathwater—you end up with an extraordinary situation where the ACCC becomes literally beyond review.

So this is a question of getting the balance right, and we believe the government has gone too far in eliminating procedural fairness and in not allowing a merits review of access determinations by the tribunal. It is important that there be a merits review of these access determinations because they will be conducted in a prescriptive way as opposed to the much criticised approach taken in the legislation hitherto.

One of the criticisms that have been made is that a review could delay things. Often people dislike litigants using appeal rights. It is a bit like the minister talking about debate in this chamber getting in the way of the orderly business of government. That is part of what we pay for in democracy and the rule of law. But I would draw honourable members’ attention to the provisions of the new sections that we are proposing on pages 6 and 7 of the amendment. You can see that there are very strict time frames put in place. The application must be made within 21 days after the commission makes the determination. The tribunal has to make a decision promptly and the action date in relation to a review means 90 days after the tribunal receives the application for review. So it can set a later date naturally, but there is a clear statutory direction there for this to be dealt with promptly. So the argument that this is going to hold things up or frustrate the objects of the act is simply not correct. This will get the balance right. We do not want to have lengthy proceedings that delay access determinations; but on the other hand we cannot throw procedural fairness and natural justice out. And, of course, this recognises that just occasionally the ACCC might make a mistake, and it is important for there to be an ability to review it.

6:40 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

The government will be opposing these amendments, the latest series of amendments in the wrecking strategy of the opposition to the National Broadband Network. There are two lots of amendments here. The first is a proposition from the coalition to require the ACCC to comply with the requirements of procedural fairness when making binding rules of conduct. Requiring the ACCC to comply with procedural fairness as part of the process would severely compromise the effectiveness of those binding rules of conduct. Binding rules of conduct are intended to enable the ACCC to quickly address problems which are affecting the supply of a declared service. The ACCC will only be able to make binding rules of conduct if it considers there is an urgent need to do so. If the issue is not urgent, the ACCC will have to deal with it by varying the relevant access determination. Since binding rules of conduct can only be made in cases of urgency, it does not make sense to require the ACCC to comply with procedural fairness as that will have the effect of delaying the making of the rules. Binding rules of conduct will have a maximum duration of 12 months. Within 30 days after making binding rules of conduct, the ACCC will have to commence a public inquiry to vary the access determination or make a new access determination. Parties will be accorded procedural fairness in the public inquiry process.

The previous amendments moved by the member for Wentworth were all about giving the ACCC more power and influence; now this lot of amendments is about undermining the ability of the ACCC. It is an extraordinary position taken by those opposite. It is inconsistent. It is only, in fact, consistent with their approach to wreck the National Broadband Network.

The second lot of amendments is about merits review of ACCC decisions under part 11C of the act. The coalition is proposing to restore merits review for anticipatory individual exemptions and special access undertakings. When this bill was first introduced to parliament, the removal of merits review from anticipatory individual exemptions and special access undertakings was widely supported in the industry. The removal of merits review was supported by industry because experience has demonstrated that any accountability benefits provided by merits review are strongly outweighed by the delays, the regulatory uncertainty and the outright gaming that has occurred. The coalition is also proposing to make new provisions for merits review for access determination and binding rules of conduct. Before making an access determination the ACCC will have to hold a public inquiry; in the course of this public inquiry the ACCC is likely to receive dozens of submissions from access providers, other industry participants and consumers. Submissions will canvass complex pricing and technical issues. The Administrative Review Council, which is the body established to provide advice to the Attorney-General about administrative law, has published guidelines about what kinds of administrative decisions are suitable for merits review. Paragraph 4.53 of the guidelines states that decisions which involve extensive public inquiries or consultations are not suitable for merits review.

Access determinations clearly fall into this category. In 2002 the then government abolished merits review for ACCC arbitration determinations because merits review was hindering the development of competition. So you have in 2002 the Howard government abolishing merits review, on the sound basis that it was hindering the development of competition, and yet the opposition now wants to reintroduce merits review, a move which would again cause uncertainty and unnecessary delays for the industry.

In relation to binding rules of conduct, the bill provides that they will have a maximum duration of 12 months. Furthermore, the ACCC will have to commence a public inquiry to vary an access determination or make a new access determination within 30 days of making binding rules of conduct. (Extension of time granted) In other words, before any merits review of binding rules of conduct could be considered, let alone take effect, the ACCC would have already started the public inquiry process to make changes to the relevant access determination.

The effect of the coalition’s amendments would be to waste the resources of the Australian Competition Tribunal, the ACCC and the telecommunications industry on a meaningless exercise in red tape. The fact is that these amendments should be rejected and the legislation should be carried by this House unamended, which would be a major reform to deliver the National Broadband Network. Structural separation has been spoken about for a long time. We are actually delivering it through this legislation. The amendments put forward by the opposition do not merit the support of this House, which is why they should be rejected.

6:47 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

Briefly and firstly, on the matter of procedural fairness and binding rules of conduct the minister says these rules would only be binding for a year. That is an age in the commercial world, particularly in the telecommunications sector. The section that we are seeking to remove from 152BD(6) is that which provides that the commission is not required to observe any requirements of procedural fairness. All that the requirements of procedural fairness meant was that they had to give the party against whom the order was being made—almost certainly Telstra—advance notice. What the minister wants to be able to do is to put in place rules with a lifetime of 12 months on an entirely ex-parte basis. That is a remarkable measure.

As far as the merits reviews are concerned, I explained earlier why we believe they are appropriate given the change to the more prescriptive way in which access determinations are being made. But just in terms of delay, I again point the House to the time limits in the amendments and also to proposed subsection (5) of our proposed 152BCY, which states:

… the Tribunal may have regard only—

for the purposes of review—

to:

             (a)    any information given, documents produced or evidence given to the Commission in connection with the making of the access determination; …

It is like a review on the papers from the commission. So there is not the opportunity to introduce a raft of new evidence or new issues. It is very circumscribed. It is going to be done in a timely fashion. It is fine for the minister to say that people exercising their right to review a statutory body’s decision or to have the benefit of procedural fairness is just clogging things up with bureaucratic red tape—and, of course, he described accountability to parliament as just playing politics. This is the classic voice, the unfiltered voice, of the all-powerful executive—hardly a new paradigm. We are a democracy. Governments should be accountable to parliaments. Statutory bodies, particularly agencies like the ACCC, are enormously powerful and it is important to have the ability to review their decisions. These proposals that we have made strike a fair balance between an elaborate system of lengthy reviews, without time limits and with a scope to introduce new material, and something that is circumscribed, tailored, trimmed both in terms of scope and time that will enable the decisions of the ACCC in this regard to be accountable, just as we seek to have the decisions of the government accountable in this House.

6:50 pm

Photo of Robert OakeshottRobert Oakeshott (Lyne, Independent) Share this | | Hansard source

I will be brief too in offering my support to the amendments. It is on the grounds of a long-term view of where telecommunications is heading and of a view that industry sectors are morphing to an increasing degree and therefore the rules of engagement from regulatory bodies should reflect as much as possible that morphing as soon as possible. Procedural fairness and merits review apply in other sectors in regard to the role that the ACCC plays and I certainly can see where the government is coming from in the short term in regard to a special set of regulatory rules for a monopoly provider and concerns around the monopoly provider. However, in the long term I think we will see the morphing of sectors and increased competition in the marketplace, which would suggest that regulatory bodies should apply an equal set of standards to all.

It was only two weeks ago that I took the Minister for Regional Australia, Regional Development and Local Government to the offices of Country Energy in Port Macquarie where there was a lively, healthy and positive discussion about the role of the broadband rollout in the mid-North Coast of New South Wales. They also discussed how an electricity retailer is having almost daily conversations with NBN Co. about how those two industry sectors will provide the rollout in a region such as my electorate. Likewise the role that smart-gridding is going to play in the sector in the future is another example of where we cannot assume any longer that poles and wires may indicate an electricity provider, separate from the poles and wires of a traditional telco and separate again, potentially, of an internet provider. We are seeing a morphing of sectors and public policy and regulatory bodies need to reflect that. A fair and equitable standard on some of those regulatory rules around procedural fairness and merits review should also be reflected in policy moving forward. I will be supporting these amendments and I congratulate the member for Wentworth for winning that support.

6:53 pm

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

Madam Deputy Speaker Burke, through you to the member for Lyne: it is not too late to change your mind. With the deepest sincerity I take on board everything that the member for Lyne has said—I love competition too. I know that the words ‘merits review’ and ‘procedural fairness’ in telco sound great, they sound just and they sound like the right thing to do but, as a practitioner in this area and having seen what happens, I can assure you, paradoxically, it is the exact opposite.

The member for Wentworth talked about merits review only being able to be decided on the documents that are put before the ACCC. That amendment came in in 2002. I will tell you what happened then because I was part of it. You had truckloads of documents. You had discovery that went into whole floors of office blocks because everyone knew they had to get every single document down, otherwise they would not be able to introduce it. The only people who made any money from this were the people paying my rent. The only people who made any money from this were the lawyers.

The member for Wentworth talks about time limits. I promise you that they are always extended. It is the cumulative effect of these delays; it is not just a simple delay. It is not saying that it is going to be delayed for a week. PSTN pricing was clogged-up in the Australian Competition Tribunal for years, which meant that consumers in the member for Lyne’s electorate and in my electorate did not have lower prices.

There was a review in 2000 by the Productivity Commission culminating in the 2002 competition amendments. The biggest thing that review examined and got the most support from—from everyone but Telstra—was the need to remove merits review. The amount of time that was being taken up by cases going into the Competition Tribunal meant that consumers were not getting the benefits of lower prices. Merits review and telco regulation has been widely discredited—

Photo of Mrs Bronwyn BishopMrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | | Hansard source

Mrs Bronwyn Bishop interjecting

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

And the member for Mackellar voted to remove merits review in the telco sector, but this evening she is going to vote to put it back. Here we go! Go ahead, you vote for that. We are going into the 21st century—

Photo of Mrs Bronwyn BishopMrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | | Hansard source

Mrs Bronwyn Bishop interjecting

Photo of Ms Anna BurkeMs Anna Burke (Chisholm, Deputy-Speaker) Share this | | Hansard source

Order! The member for Mackellar has had a good go.

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

Come in spinner! It is a 21st century network, but let us go back to a 20th century problem that was taken away in 2002. The member for Wentworth talked about timing and timing is everything. In dynamic industries like telcos where the amount of money on interconnect charges and on declared services is measured in minutes means that every single day of delay amounts to millions of dollars. I will also let the member for Mackellar know that some of the companies I acted for went broke waiting for their cases to be heard in the Australian Competition Tribunal. It was an absolute disgrace that that happened.

In 2002 the issue to be addressed was that of gaming and no-one could compete against Telstra’s market power in this area. That is why merits review was specifically removed. This is an area of this debate which I feel strongly about. It does not matter if you have all the competition levers right and it does not matter if you have all the ex ante and ex post rules right because, when you have operators with significant market power and the ability to game the regulatory system, you simply undo it all for consumers. These amendments will actually undo all the gains that will be made.

I say to the people here and to the member for Lyne that this is important. This is not something that is about justice. These are not amendments that seek to uphold justice. These are amendments which are ill conceived and will actually result in residents in the member for Lyne’s electorate and in my electorate being adversely affected by these changes. I urge members here to reject these amendments. (Time expired)

6:59 pm

Photo of Ed HusicEd Husic (Chifley, Australian Labor Party) Share this | | Hansard source

As I have reflected on previously, when we look back on this debate we will see whether we had someone with skills and expertise in this area and who was helping us to advance the cause of technology by bringing a new network that had been denied to the Australian public for many years or someone who went down as a vandal. The more we watch what is taking place here tonight and over the course of the last few weeks, we realise that the contribution from the member for Wentworth will be best summed up as vandalism against this network.

He is effectively demonstrating that he does not believe that we should proceed with this. He said in an MPI that he could not determine whether there is any prospect of a net benefit to our economy. On 26 October, he said that he doubted that there was a ‘net benefit to our economy from this project’. Everyone in this country knows that getting a broadband network in place in this country will have benefits across a range of areas. But the opposition spokesperson charged with being responsible for the opposition on this policy cannot even see a net economic benefit. He then comes forward and says, ‘We think a merits review will be a great idea’. If you cannot trust him on whether there will be an economic benefit, how can you trust him on whether or not he is sincere in his ambition to put in procedural fairness by installing a merits review that his own government got rid of?

He is advocating today that a merits review is the way to go when we finally come to a landing on pricing, but it will shackle us to a litigator’s merry-go-round where they will put the money in and spend up big. The member for Lyne has seen in regional New South Wales how Telstra has just gotten rid of job after job and has not cared about the impact. I have seen it myself. Telstra has not cared about the impact on regional Australia, but at the same time they can find the money, as they have in the past, to challenge regulators’ decisions on pricing. You do not think that in this industry they would not use the merits review to shackle us all to a litigator’s merry-go-round?

This is simply a recipe to stall the NBN. This is a tactic that is not designed in the interests of fairness, in the interests of advancing this further or in ensuring that we have got some oversight and review—this is yet another mechanism being put in place by an opposition whose chief spokesperson on this cannot even see the economic benefits of the NBN, which is startling given his background and expertise. We are being consigned to having delay built into this process. It is being dressed up as being for the benefit of the public when it will actually slow the process down instead of getting a landing on pricing and moving forward on it.

Can we just inject a bit of reality into this? As a wholesaler, NBN Co. will not be the body entrusted to go to individual homes to connect the NBN, it will be the retailers. What will drive it are the retailers and the competition that comes out of doing that. Again, the member for Wentworth does not believe that this presents an economic benefit to the country. He cannot even describe the arrangements between wholesaler and retailer in this, yet he now advocates that we should embrace a merits review as a way of bringing fairness into this when his own government realised what a drag on competition it is.

7:03 pm

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | | Hansard source

I will be brief because the passionate remarks of the member for Chifley cannot go unanswered. The member for Chifley says that I am deficient in not being able to see a net economic benefit for a $43 billion project, which has not been the subject of any cost-benefit analysis. I do not really know what school of economics the honourable member is from, but the whole point of a cost-benefit analysis is to work out whether there is a net economic benefit. You cannot do that without doing the work. I just remind the honourable member of the comments by the Secretary of the Treasury, Dr Ken Henry—whose fine Italian hand was all over the OECD review, I might say—in 2009:

To start with, like all government spending, there is a need to ensure that any activity is cost effective. Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing. That is, when taxpayer funds are not put to their best use, Australia’s wellbeing is not as high as it otherwise could be. It is important, therefore, that policy-advisers are able to access quality evidence and use robust frameworks to assist governments to judge the relative merits of alternative policies.

That really is the point. I remind the honourable member for Chifley that if you want to look at the net economic benefit, ‘net’ means that you take into account the benefits and the costs. That is why they call it a cost-benefit analysis, because there is no such thing as a ‘free good’ here. The government is going to spend $43 billion and we have to identify what the benefits will be and see whether they are greater or lesser than $43 billion. So, no, I am not able to determine the net economic benefit of a project without doing any analysis and neither is the government. It does not want to do that analysis because it knows it will not stack up.

Photo of Ms Anna BurkeMs Anna Burke (Chisholm, Deputy-Speaker) Share this | | Hansard source

The question is that the amendments be agreed to. There being more than one voice calling for a division, in accordance with standing order 133(b) the division is deferred until 8pm.

Debate adjourned.