Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

Before I seek leave to move the opposition amendments, I want to say something for the benefit of the Leader of the House. Given that the Senate Select Committee on the National Broadband Network is inquiring into the National Broadband Network Companies Bill 2010, the intention tonight is to debate the amendments but not, considering the hour, to delay the House by seeking to divide on any amendments. There is one exception: the freedom of information amendment to be moved by the Greens. It may make sense to deal with that at the very end, because that will take us past eight o’clock. Is that—

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

Yes.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

Yes, the member for Melbourne is comfortable with that—very good. I seek leave to move amendments (1) to (4) and (8) to (15) together.

Leave granted.

I move:

(1)    Clause 3, page 3 (lines 8 to 22), omit paragraph (1)(b).

(2)    Clause 4, page 5 (lines 9 to 26), omit the dot points.

(3)    Clause 5, page 7 (line 2), omit the definition of Commonwealth ownership provisions.

(4)    Clause 5, page 7 (lines 14 to 16), omit the definitions of declared pre-termination period and declared sale deferral period.

(8)    Clause 43, page 37 (lines 5 to 22), omit the dot points.

(9)    Subdivision A of Division 2 of Part 3, page 38 (line 3) to page 39 (line 5), omit the Subdivision.

(10)  Heading to Subdivision B of Division 2 of Part 3, page 39 (lines 6 and 7), omit the heading, substitute:

Subdivision B—Productivity Commission Inquiry

(11)  Clauses 47 and 48, page 39 (line 8) to page 41 (line 16), omit the clauses.

(12)  Clause 49, page 41 (lines 19 to 22), omit subclause (1), substitute:

        (1)    This section applies if it is proposed to enter into an NBN Co sale scheme and there has not been a previous reference to the Productivity Commission under this section.

(13)  Clauses 50 and 51, page 44 (line 14) to page 46 (line 4), omit the clauses.

(14)  Clause 52, page 46 (lines 10 and 11), omit “unless the Commonwealth ownership provisions have ceased to have effect”, substitute “until 15 sitting days after the Parliamentary Joint Committee on the Ownership of NBN Co has reported to both Houses of the Parliament”.

(15)  Clause 53, page 46 (lines 16 and 17), omit “unless the Commonwealth ownership provisions have ceased to have effect under section 51”, substitute “until the completion of 15 sittting days after the Parliamentary Joint Committee on the Ownership of NBN Co has reported to both Houses of the Parliament, under paragraph 3(1)(b) of Schedule 2, on the Committee’s examination of the report of the Productivity Commission inquiry mentioned in section 49”.

These amendments all deal with the provisions in the bill that are designed to make it almost impossible for the Commonwealth to sell the NBN. Essentially, the bill currently provides that the NBN cannot be sold until it is complete. That will take many years, and it may be that no government will complete the NBN. Indeed, the general view in the telecommunications industry is that this project is so misconceived and so expensive in terms of the required capital investment that it will never be completed. Tying the hands of future governments in this way is simply not good practice. We seek to delete those provisions in the bill that seek to tie the Commonwealth’s hands. In so doing, we seek to eliminate the attempt by the government and the Greens to make this massive government-owned monopoly be permanently and perpetually in government ownership.

The simple reality is that Australia does not need another massive government-owned telecommunications monopoly. We had one of those—it was called Telstra. Before that, it was called Telecom. Before that, it was the Postmaster General’s Department or a division thereof.

Stephen Smith (Perth, Australian Labor Party, Deputy Leader of the House) Share this | Link to this | Hansard source

PMG.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

PMG—exactly. A very good decision was taken to privatise it, and now the government is seeking not only to turn back the clock but also to make it practically impossible for this new government-owned monopoly to be disposed of. We note that there is a proposal to have a Productivity Commission inquiry prior to any sale, assuming that the network has been completed. It is remarkable that the government would agree to have a Productivity Commission inquiry into the sale of a $50 billion investment but not to have a Productivity Commission inquiry into whether it should be established in the first place. But this is just one of many incongruities that we see in the government’s approach to this matter. That is the first set of opposition amendments and it relates, as I said, to the Commonwealth ownership provisions.

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

The government does not support these amendments. Under part 3 of the National Broadband Network Companies Bill 2010, NBN Co. cannot be privatised until five clear steps have been taken. First, the communications minister must declare that the NBN is built and fully operational; second, the Productivity Commission must conduct an inquiry into the NBN; third, a parliamentary joint committee on the ownership of NBN Co. must examine the Productivity Commission’s report; fourth, the finance minister must declare that conditions are suitable for entering into and carrying out an NBN Co. sale scheme; and, fifth, it must be the case that the parliament does not disallow the finance minister’s declaration.

It is very clear that the retention of NBN Co. in public ownership until the network is complete and operational is designed to ensure that the network can be rolled out consistent with the government’s objectives and as recommend by the implementation study. The effect of the coalition’s amendments would be that a future government could sell NBN Co. at any time, even if only a small part of it had been built. As such, the coalition amendments would jeopardise the rollout of the NBN as a national network providing new broadband infrastructure to all Australians.

It is not surprising that the ideological free marketeers opposite want to repeat the mistakes they made with Telstra. We know that, when Telstra was privatised, it went from being a public institution to being a privatised monopoly with consequential negative impacts on consumers. Most importantly, we know that because the structural separation question was not addressed by those opposite when they were in government there was a failure of public policy that had to be fixed up by this government when we passed legislation dealing with the question at the end of last year.

The opposition is proposing amendments that also remove the right of a future parliament to disallow any sale. But this government considers that a sale decision would be best made in the future by the government and the parliament of the day. The amendments do retain both a Productivity Commission inquiry and a joint parliamentary committee inquiry on ownership of NBN Co., but the amendments do nothing more than pay lip service to them.

The amendments would allow a future coalition government to sell NBN Co. regardless of what the commission and joint parliamentary committee decide. The main purpose of the amendments is simply to enable a future coalition government to sell NBN Co. as quickly as possible, regardless of the needs of regional and rural Australians and the public benefit from restructuring the telecommunications market. That is why the government simply does not support these amendments.

We need to move forward in a positive way towards the future; not to look backwards at the mistakes of the past and repeat them. But those opposite are ideologically opposed to the idea that the government should address market failure, which is what we have seen in the telecommunications sector. We have seen market failure in practice, with 20 failed plans and a lack of services, particularly impacting on regional Australia. So the government will not support these amendments and, indeed, is strongly opposed to them. We say to the opposition: it is one thing to make mistakes in government—and they were made time and time again and reinforced by the coalition when in office—it is another thing not to have the capacity to step back, examine the consequences of those mistakes and concede that they were indeed mistakes and should not be repeated in the future. The government opposes these amendments.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Certainly, the coalition very much supports action in telecommunications where there is market failure. But the reality is that so much of the money expended in this project is going to be in areas where there is no market failure and where there are other, cheaper alternatives.

Let me return to the substance of the amendments in relation to the coalition’s view that it is not the role of government to hold this project in perpetuity and that we should not make it more difficult than need be to achieve a sell-off of this project. It is vitally important that we get a highly efficient and highly effective telecommunications system. History has shown that government as the owner has not been particularly effective in running business enterprises. That is clearly done more efficiently and effectively by the private sector.

It seems astounding that we are going to have a situation where there is a Productivity Commission investigation with regard to the sale of this project when we were denied a Productivity Commission investigation into the viability and important aspects of the business itself. It just seems absolutely unreasonable that you would propose to give the Productivity Commission input into the sale and yet not give the Productivity Commission input into the actual proposal itself.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

I find it absolutely laughable that those opposite come in here and want to make it easier to privatise NBN Co. As the minister has said, there is one group of people in this parliament you should never take advice from when selling a telco—it is those opposite. There is one group who wrote the playbook on how not to do it—it is those opposite.

With these amendments they want to remove the very sensible protections that we have decided to put in there to make sure that a national piece of utility infrastructure is sold down in the national interest. The provisions in this bill will ensure that the government plays an important role in the sale when the government does sell down its interest.

The important issue is that we step away when the environment is right. The steps in this assessment include reference to the Productivity Commission. What a paradox it is indeed that those opposite are so ready to call on the Productivity Commission to prevent it from being built but then they do not want to call on the Productivity Commission to make sure that it is sold properly. These people want to reject assessments by the Productivity Commission, they want to reject parliamentary committee recommendations and they want to reject the ability for the minister to actually make an informed decision at the time of the sale to determine whether or not a sale is appropriate. Most importantly, the finance minister will need to declare—and there is a very strict process that is set out in the bill for the finance minister to declare—that favourable market conditions exist for a sale. How sensible is that? It is eminently sensible to ensure that when the sale is done it is done properly, it is done in the national interest and it does not adversely affect the national interest.

This is critical because there is the ability within this bill to ensure that the government can determine what is an unacceptable ownership or control situation. It is a very important constraint on the ownership of NBN Co. Again, these provisions reflect the government’s intention that NBN Co. be a national piece of utility infrastructure. We have heard the other side talk about what prudent investors would do in certain situations, but no prudent legislature would ensure its biggest piece of national utility infrastructure be privatised without considering the potential future of the industry. That is exactly what did not happen in the T2 and T3 sales.

In this process we are doing a very important thing in considering the role of government early in the process, and in the latter stages the role of the private sector. It is a well thought out plan which is documented in this bill before us. These are absolutely necessary protections to prevent what the coalition did to Telstra, the most productive outcome of which was to split the telco act into two and not much else. The most productive thing it did was to create more paper and split one telecommunications act into two.

These provisions will ensure that the selldown process is done in a managed way. It will ensure that it is done in a manner that reflects prudent investment and prudent financial judgment, and I urge all members present to reject the amendments that have been put before us, because they will simply repeat the mistakes of the past.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

I want to respond to some of these points. The Minister for Infrastructure and Transport demonstrated touching concern for the plight of regional and rural Australia and broadband services therein and said that there had been failed schemes. One scheme that failed to take effect was the OPEL scheme that was established by the previous government. That scheme would have delivered fast broadband services to regional Australia. That scheme was fully funded and was abandoned by the Rudd government immediately on coming into government. The melancholy truth is that people in regional and rural Australia would have access to broadband now if the Howard government’s plan for broadband services had been allowed to go forward.

Let me respond to the member for Greenway, who said that the only consequence of the privatisation of Telstra was the production of a lot of paper. Presumably, some of that paper was produced by the legal profession, which did very well with Telstra. She was a distinguished member of that noble profession. Her denigration of the sale of Telstra is a little unconvincing on that ground.

In a nutshell, without going through these amendments in the finest detail, they simply remove the obligation for the National Broadband Network to be completed before it is sold. That is the major amendment. The member for Greenway said it was a good idea to legislate that the finance minister says that circumstances are propitious for a sale. That is like legislating for ministers to do their duty. Obviously, no government—of any persuasion, one would hope—would sell a major asset other than when conditions were suitable for a sale.

If our amendments are accepted, there will remain a provision for a Productivity Commission inquiry to be held into the sale and for consideration by the joint parliamentary committee. This is not a question of parliament being, if you like, prevented from having oversight of the process. Our amendments would prevent this parliament from binding the hands of many future parliaments, because this network will take many years—perhaps many decades—to complete. This network cannot be sold until such time as it is complete. The provisions we are seeking to delete are effectively the poisoned pill designed to make it virtually impossible for the NBN ever to be sold.

The reality is that we are a free market economy. We have had a lot of lectures in the context of climate change from the Prime Minister about the virtues of the market, the law of supply and demand and the benefits of taking market approaches to measures. She is not very consistent, because this is an area where for decades there was a common commitment to getting government out and getting competition into the sector. What we have here is government going back into it at a level of investment that is staggering. We should remember that, for considerably less than the total amount of the investment in the NBN, the government could actually buy Telstra at its current market price. I am not suggesting that it should renationalise Telstra, but it gives you some idea of the scale of investment.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

Ms Rowland interjecting

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

You could have a complete integrated telecommunications company with mobile, broadband and retail for a lot less than they are spending on the NBN. The member for Greenway says it is a great idea. Maybe that is something you can submit to a cost-benefit analysis. We commend these amendments to the House.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

It is sad when you see great people forced to do things that deep down they just do not believe in. I will give the member for Wentworth credit: there is panache in the way he does it and it is inspiring. In many respects it is greatly disappointing. I love the fascination with a cost-benefit analysis. It was reflected upon earlier by the Leader of the House that the water plan that the member for Wentworth had responsibility for never had a cost-benefit analysis. It was $10 billion and a cost-benefit analysis was never called for, never sought, and never put in place by them.

When the member for Wentworth mentioned OPEL, it brought to my attention Henry Ergas, who the opposition have quite a deal of enjoyment quoting to us from time to time. In his book Wrong number: resolving Australia’s telecommunications impasse he talks about how almost $4 million through your 11 years in government was spent addressing telecommunications issues in regional areas. I do not know that at any point at that stage the opposition called for a cost-benefit analysis.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

None.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Right, member for Greenway. There were other claims made during the debate too. Since 1997, over $3 billion, at 2007 prices, of taxpayers’ money has been appropriated to schemes aimed at promoting the availability or use of telecommunications, mainly in non-metro areas. In mid-2007 the government committed a further $958 million to the Optus-Elders OPEL consortium for the construction of a WiMAX network in non-metro areas. I do not know where the cost-benefit analysis was. I would be more than happy for anyone opposite to point out where that actually was.

There were some other outstanding claims. For example, the member for Wentworth said that people in the sector believe this may not ever happen, that the NBN may not ever get built. One, I would love to hear where he is quoting that from and, two, if it is the case, how come we have got over 30 construction companies lining up ready to participate in the build, ready to put people on to make this happen? Again he has no proof and no ability to back it up. He just puts a statement up.

The other thing too is the whole notion of the scare campaign on the monopoly. The fact of the matter is that we needed to get into this space due to the failure previously to be able to address the market failure because, effectively, we had what I would liken to a hundred year war between Telstra and regulators: Telstra saying that it would not invest unless it got a return rate that would see prices at a level that consumers would not bear, and the government of the day refusing to allow for Telstra to do this. We had a system where there was no investment in broadband because Telstra was—and I know this sounds hard for people in this chamber to believe—playing hardball against regulators, against government and against anyone that did not want to play by the ground rules set by Telstra. That is why I shuddered when the member for Wentworth was suggesting for that moment that we could almost buy Telstra back. I do not know whether you would want to buy them back in a million years.

There is a reason we got to this place, and the member for Bradfield quoted this back on 23 February. He was wondering why we went from a $4.7 billion plan to what we have now. You know exactly why: you had the strategic genius of the entrepreneur Sol Trujillo, backed up by Don McGauchie, whose great contribution to HR in this country was alsatians on the docks, saying, ‘We’ll put in a five-page tender and that is all we will do in relation to a multibillion-dollar program,’ and it was clear that the major telecommunications company in this country was not prepared to play ball on broadband. Optus could not foot the bill, Telstra was not ready to play, so we basically had the position put where we needed to move into this space and do so in a big way. They know exactly why this is the case.

And if we are in this area, we need to provide stability and certainty for the construction phase and at the proper point go to sale, unlike the situation before, where it was a grab for cash by the opposition. It failed to go through the issue of structural separation, which we have had the courage to undertake in government and then to ensure that the NBN is in a position to be let loose in the market at that point. What these guys are playing with they know is unsustainable. (Time expired)

Question negatived.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

I move opposition amendment (5):

(5)    Clause 9, page 15 (lines 4 to 8), omit the clause, substitute:

9 Supply of eligible services to be on wholesale basis

        (1)    An NBN corporation must not supply an eligible service to another person unless the other person:

             (a)    is a carrier or a service provider; and

             (b)    will use the eligible service to supply a carriage service or a content service to the public.

        (2)    For this section, a service is supplied to the public if:

             (a)    it is used for the carriage of communications between 2 end-users, each of which is outside the immediate circle of the supplier of the service; or

             (b)    it is used for point-to-multipoint services to end users, at least one of which is outside the immediate circle of the supplier of the service.

        (3)    In this section:

immediate circle has the meaning given by section 23 of the Telecommunications Act 1997.

This amendment deals with the issue of the supply of services by the NBN. I encourage the honourable members opposite not to be reactive and Pavlovian in their response here and immediately reject what I am putting to them.

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

Automatically opposing is—

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

Okay, thank you. Steady on! It is common ground that the NBN should be a wholesale entity—that is apparently part of the scheme—and should not be able to go into the retail space. That is the big idea, as they say. Unfortunately, this is not perfectly achieved, because we have in this bill too many loopholes to enable the NBN—and this is something a number of the telcos have alerted the Senate committee to—to provide services directly to companies who could, as has been pointed out by a number of the telcos, very readily acquire a carrier licence. A bank could do that, or Woolworths or any other large corporation could acquire a licence.

So why is that a problem? It is a problem because, firstly, the object, as we understand it, is that this will be a purely wholesale business. Secondly, we know that the NBN is a very expensive undertaking. It is going to be very heavily capitalised—we say excessively capitalised—but there will be an incredible pressure on it to generate additional revenues. That is inevitable, and that will apply whether the government of the day is Labor or Liberal or whatever; it does not matter. The finance department, the Treasury, will be saying, ‘You have got to find some more cash for us.’ So the natural temptation for the NBN will be to move upstream into retail services. There will be plenty of big companies saying, ‘Look, we don’t want to deal with the middleman. We do not want to deal with Telstra. We just want to do a deal with you.’ There is too much opportunity in the legislation at the moment to enable the NBN to get around that.

So what we are proposing here in amendment (5), in clause 9, is really a belt-and-braces provision to delete that clause which simply says that you cannot supply services to somebody unless they are a carrier or a service provider. It is very easy for a company to get a licence to be a carrier or a service provider and then just provide services to itself. We propose that this be fleshed out so that it says:

(1)

An NBN corporation must not supply an eligible service to another person unless the other person:

(a)

is a carrier or a service provider; and

(b)

will use the eligible service to supply a carriage service or a content service to the public.

Then there is a further fleshed out definition of ‘the public’. I believe that is a critically important amendment and one that has the support of a whole series of players in the industry, both Telstra and Optus and a number of the other carriers. It really is quite consistent with the objects of the legislation and I would encourage the government, and indeed the crossbenchers, to consider this very carefully. It is quite consistent with the objectives of the act.

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

The government does not support opposition amendment (5). The National Broadband Network Companies Bill 2010 as drafted makes NBN Co. a wholesale-only provider. The mechanism it uses is a restriction on selling to any party other than a carrier or carriage service provider or specified utility. The proposed amendment puts a further restriction on the parties NBN Co. can supply. It leaves the requirement that NBN Co. supply only carriers or carriage service providers but only those carriers or carriage service providers that, in turn, provide a service to the public.

A couple of points can be made in response to this. First, NBN Co. will only supply a service that by its nature is a wholesale service—for example, a layer 2 service on the fibre network. This is not a service that can be used by an end user as considerable resources and capability is required in order to turn a layer 2 service into an end-user or retail service. Secondly, the restriction proposed by the opposition would prevent an arrangement that has been permitted by the legislation since 1997 that a person can become a carrier even if that person wishes to supply services primarily to his or her own operations. The opposition amendment is poorly drafted and has the effect of preventing service providers from reselling services to other service providers, which I am advised is a common arrangement. For these reasons, the government does not support this amendment.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I welcome the opportunity to speak on opposition amendment (5) because I think it is important that proper commercial activity is protected from mission creep by this massive monolith that the government has created. It is an organisation that is being protected from competition in a range of ways. I think it is important that we put in place the sorts of protection that would ensure that NBN Co. does not creep its way into providing retail services by stealth. It has certainly been represented to me by people in the industry that they are very concerned about that prospect. Also, when you look at the new exemption with regard to utilities, once again we see a situation where a service that could be provided by a range of other persons or corporations active in the industry may be usurped by the sale by NBN Co. direct to utilities. So I certainly speak in support of this amendment. I certainly reject the notions put forward by the Minister for Infrastructure and Transport that it is not an appropriate amendment. I think it is one that the House should support.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

In response to the remarks of the Minister for Infrastructure and Transport, I am not sure whether the notes relate to another set of amendments but the point here is a very basic one. In Telstra’s submission to the Senate Environment and Communications Legislation Committee—and I do not agree with all of its submission but I do agree with this part of it—the point is made:

… nothing in section 9 requires that the fundamental characteristic of wholesale supply—participation in retail end-user markets via on-supply to the public—be present at all.

The key problem—

as its submission goes on—

is that statutory concepts of “carrier” and “carriage service provider” are … ill-suited to the important task of defining NBN Co’s scope of business.

There are a large number of licensed carriers who do not provide services to the public but hold carrier licences for other reasons. The Telstra submission goes on to point out:

There are a number of large entities that are already carriers or CSPs, and who could therefore be directly supplied by NBN Co under the proposed draft. For example, the current TIO membership (of which a CSP must be a member) includes:

• large corporate and business customers, including Woolworths, NEC Australia, Port of Brisbane and CBIT;
• educational institutions, including University of Queensland IT Services and Sebastopol College, a community college in Ballarat;
• Government agencies, including the Library Board of Victoria and South West Healthcare, which covers most Government health deliverers in south west Victoria; and
• local government …

The simple fact of the matter is that everybody in business, if they can manage it, would like to cut out the middleman. They will see the retail service providers—the private sector part of the telecommunications industry in this NBN world, if we get to it—as troublesome middlemen that they will not want to deal with, and we will discuss that further in the next amendment. The consequence will be that NBN, acting quite rationally in terms of its own commercial objectives, will creep further and further into the province of the retail service providers. What we will see is the gradual evolution of the NBN from being originally a wholesale carriage provider to becoming a wholesale carriage provider with a large retail, government and corporate business. In other words, the only part of the retail telecommunications business that it will not be undertaking is that to residential and small businesses. But all of the larger customers will be eligible for assault from NBN.

I make one other point. A company may become a carrier for the purpose of this—so eligible to be sold to by a carriage service provider, eligible to be dealt with by the NBN under this clause, simply because it is in the business of supplying telecommunications services of a completely different kind as part of its business. It might be a mobile reseller, for example. So there is a huge scope for the NBN to puncture through the limitations that, supposedly, the government wants to set up around it. This is going to become a telecommunications equivalent of Frankenstein. It will literally take over large sections of the telecommunications business in Australia and it will do so unfairly and unjustly because it benefits from a massive subsidy from the government. Remember that there is no level playing field between the NBN and anybody else because it has access to unlimited funds with no commercial or even realistic return on the capital expected.

This is a shocking invasion of the private sector, a shocking incursion on competition, and, if the government is serious about NBN being wholesale only, it should support this amendment, which, as I said, has broad support within the telecommunications sector.

Question negatived.

I move opposition amendment (6):

(6)    Clauses 10 to 16, page 15 (line 9) to page 17 (line 32), omit the clauses.

These clauses are just below the previous area of amendment I referred to. These provide express exemptions from the already sieve like restriction on the supply of eligible services referred to in clause 9. These provide complete exemptions in respect of a series of utilities. In other words, transport services, electricity supply bodies, gas supply bodies, water supply bodies, sewerage bodies, stormwater drainage services and road authorities can all deal directly with the NBN. So, for exactly the same reasons I articulated earlier, we are seeking to make that amendment in order to reinforce the importance of the wholesale-only nature of the NBN.

The utilities are very keen on these amendments of course, and what is interesting is that they are keen on them because, they say quite bluntly, they do not want to deal with the middleman. That is their language, literally. They see the RSPs—that is, Telstra, Optus and others—as being unnecessary, troublesome middlemen. The problem with that is, once you provide an exemption of that kind for these utilities, why shouldn’t any other large entity be able to have it?

The member for Chifley is shaking his head, and I know what he is going to say—that these services would only be used for providing smart grids. There are two points there. The provision of machine-to-machine telecommunications services is probably going to be the fastest growing area of telecommunications over the next few years. It will not be too long before most devices and most machines are connected to each other, and many of them, naturally—particularly those that are mobile—will be connected wirelessly. Nonetheless, that is a legitimate area of the telecommunications industry to be engaged in. These exemptions will have the effect of taking that away from the private sector in large measure and giving it to the exclusive preserve of the NBN. The simple fact is that we understand why Energy Australia, AGL or Sydney Water would rather not deal with a middleman. They would rather buy wholesale services directly from NBN. We understand that. But, in allowing them to do that, the government is seizing even more of the territory of the existing private sector telecommunications companies. It is for that reason—and it is exactly the same principle that I described earlier in respect of amendment (5)—that this amendment should be supported.

I perfectly respect the interests of the utilities, wanting to have the legislation drafted in a way that protects their commercial interests. But the House must remember that the object of the NBN, so we were told, was to provide a wholesale-only, common carrier that did not provide retail services and did not compete at the retail level with the private sector. Yet, both in the loopholes in clause 9 and now in these provisions, clauses 10 to 16, that we are seeking to excise, we are seeing a great opportunity for NBN to take over that part of the private sector’s business.

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

The government does not support this amendment. The general rule is that NBN Co. can supply only carriers and carriage service providers, but NBN Co. can also supply to specified utilities, for limited purposes.

There are three reasons why we need to permit supply to utilities in this legislation and therefore should not support an amendment deleting those clauses. Firstly, under existing legislation, utilities can do things that would otherwise make them carriers or carriage service providers without being classified as carriers and carriage services providers under the Telecommunications Act. The bill simply seeks to allow NBN Co. to treat them as carriers and carriage service providers when it comes to the supply of services. Secondly, these arrangements will support the growth of smart infrastructure management in Australia, including smart management of energy supply. A very important component of the future productivity growth of this nation is the development of smart infrastructure. Thirdly, it puts pressure on telcos to provide utilities with the services that they need.

The bill imposes tight limitations on the way the utilities use NBN Co. sourced services. They must use them for the sole purpose of carrying communications necessary to monitor and administer their own networks. Utilities cannot use these services to provide retail services to end users. Utilities and transport authorities will still need to purchase normal communications services, like telephony or broadband internet, from retail providers. Services that NBN Co. make available to utilities should also be available to other carriers and carriage service providers, and they could offer these to utilities if they wished.

This amendment moved by the member for Wentworth would deprive utilities of the benefit of arrangements they have now as well as undermine efforts to develop smart infrastructure and reduce incentives for carriers. That is the reason why the government does not support these amendments.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

I do not know whether the Minister for Infrastructure and Transport has been sold a pup, because quite a large pup has been sold to the Greens—which we will come to later. What he just said to the House is absurd, frankly. The utilities have been quite clear about what they are seeking to achieve. The Energy Networks Association, in their submission of 24 February to the Senate Environment and Communications Legislation Committee, said:

Even if retail service providers do offer an appropriate NBN service type, the requirement to deal through a third party would add additional costs, without adding value.

That is no more than saying, ‘I always prefer to buy wholesale; I do not want to deal with the retailer.’ On that basis the NBN will dominate totally all of the government and large corporate telecommunications business in Australia. Again, I do not know whether the government has been sold a pup on this by the department or by the energy and utilities sector, but there is no limitation on what utilities can do. They obviously cannot resell the telecommunications services to the public unless they have a carrier licence, but if they do have a carrier licence they are entitled to. In terms of their own services, consider clause 11, which deals with electricity supply bodies. It says that the prohibition on providing services to persons other than carriers does not apply if:

… the sole use of the carriage service is an electricity supply body to carry communications necessary or desirable for:

(i) managing the generation, transmission, distribution or supply of electricity; or

(ii) charging for the supply of electricity …

What else does an energy supply company do? That describes the entirety of its business. It manages the generation, transmission, distribution or supply of electricity and it charges for it. Literally everything it does is for that purpose. I challenge honourable members on the other side to tell me and the House a function of an electricity utility that is not covered by those general words. I cannot think of one. It covers the entirety of their operations and the same language is there in clause 12 for gas utilities, clause 13 for water utilities and so forth.

With respect to the honourable minister, this is an exemption that will basically mean that there will no longer be any fixed line telecommunications services provided to any of these utilities in Australia other than by the NBN. All of the corporate and utility business of Telstra, Optus and other providers will be gone. The NBN, because it has the benefit of this enormous government subsidy, will be able to undercut anybody else. It will have the dominant if not monopoly fixed line infrastructure and it will take over that business. If the government seriously believes what the minister just said, it has been deluded, conned or misled.

I recognise that we are not going to divide on this amendment tonight, but this is something that I would commend to the government and the Senate committee to reflect on very deeply. I listened very carefully to what the minister said and if the object that he sought to achieve in this bill was as he described, that object is not there. He has been sold a pup.

Question negatived.

I move opposition amendment (7):

(7)    Clause 41, page 35 (after line 30), insert:

     (3A)    An NBN corporation must not supply an eligible service that is higher than Layer 2 in the Open System Interconnection (OSI) Reference Model.

This can be dealt with fairly quickly because we are talking about the same issues. This refers to the layer 2 bit stream service. We are proposing here that, on page 35 of the bill, in clause 41, a new subsection is added which provides at 3A that an NBN corporation must not supply an eligible service that is higher than layer 2 in the OSI reference model. This is designed to ensure that NBN does not creep up into higher value added services, creep up the value chain, if you like, and depart from what is said to be its objective as a provider of that layer 2 service.

This is a fairly technical area. I will not say any more about it simply because I know there has been quite a lot of correspondence between the government and the telcos and I think this section is probably in the stage of tentative amendment following those discussions. It is probably a matter that will be dealt with in the Senate committee. The bottom line is once again that this is a massive, highly capitalised government monopoly. The government has said it is to be wholesale only and it is to be like the freeway on which the retail service providers will be able to run their electronic buses, trucks, cars and trains and so forth.

This amendment is needed, just as the other amendments were, to ensure that the wholesale-only freeway does not start to get into the retail carriage business. I hope that I have demonstrated to the House that there is ample scope for it to do so under the bill as it is currently drafted and that this restriction here is effectively some legislative belt and braces to ensure that it does not escape the bounds that we are seeking to set for it.

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

The government does not support this amendment. NBN Co.’s corporate plan and the government’s statement of expectations very clearly set out that NBN Co. will operate at layer 2 of the network stack, but, for very good reason, the bill does not include that restriction. The government is reluctant to include technology specific limitations on NBN Co. unless and until there is a demonstrated need to do so. An inflexible rule could be counterproductive in terms of the services provided to customers. That was recognised by Telstra in its submission to the Senate committee that is examining the bills that the member for Wentworth referred to.

Once the market situation is clearer, and should such certainty be required, clause 41 of the bill provides for the minister to make licence conditions on what services NBN Co. must or must not supply. With suitable carve-outs, a restriction of the type contemplated by this amendment would most appropriately be dealt with by a carrier licence condition, if the need arises. For that reason the government will not be supporting this amendment.

Question negatived.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

I move now to my amendments (16) and (17).

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Are you going to do (18) and (19)?

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

No. In fact, because we will divide on (17) I will just deal with that one now. Accordingly, I move opposition amendment (17):

(17)  After clause 96, page 79 (after line 15), insert:

96A Freedom of Information Act

                 NBN Co is taken to be a prescribed authority for the purposes of the Freedom of Information Act 1982.

This amendment is designed to make the NBN Co. a prescribed authority for the purpose of the Freedom of Information Act 1982. I will speak in apprehension of the amendment coming from the Greens, which, regrettably, is one where the Greens have been sold a big pup by the government.

Initially the Greens were proposing to move the same amendment that we describe here. This would have had the effect of bringing the NBN under the ambit of section 9 of the Freedom of Information Act, so it would then be an agency within the meaning of that act and would be subject to that act. This does not mean that every document of the NBN could, willy-nilly, be produced. The NBN would then be able to claim exemption under part IV of the Freedom of Information Act, including section 42, ‘Documents subject to legal professional privilege’; section 46, ‘Documents disclosure of which would be contempt of parliament or contempt of court’; section 45, ‘Documents containing material obtained in confidence’; and section 47, ‘Documents disclosing trade secrets or commercially valuable information’. It is absolutely critical that the NBN is thoroughly accountable in this regard.

Unfortunately, the amendment that the Greens will propose shortly—and the House may consider this in some detail when they propose it—has the effect of making the NBN completely immune in practical terms from the Freedom of Information Act. The Greens amendment, which I understand the government has persuaded them to put up, has the effect of making exempt all documents of the NBN which can be described as being ‘in relation to its commercial activities’. Given that the NBN is a business, it has no activities which are other than commercial. The words ‘in relation to’ have been construed by the courts on many occasions as being of very great ambit. So if ‘commercial activities’ has a defined meaning—and of course that has a very broad meaning; it is hard to imagine a term that is more generous in its compass—adding the words ‘in relation to’ makes it wider still.

I would ask the member for Melbourne, when he moves his amendment, to advise us what documents of the NBN would not be exempt under his amendment. We have, frankly, the farce of the Greens, who are claiming that they are interested in accountability and transparency but have been gulled or conned by the government into a set of amendments that will make the NBN, for all practical purposes, completely immune from disclosure of any documents under the Freedom of Information Act.

The amendment that we propose, and which the Greens did in fact support some time ago, is much more appropriate. It makes the NBN a prescribed authority under the Freedom of Information Act, which makes it an agency for the purpose of the act. The act gives it extensive exemptions that we are all familiar with, including those that I described. This is an effective Freedom of Information Act amendment which will result in the NBN being accountable without commercially confidential, trade secrets, legal documents et cetera being obliged to be produced. (Time expired)

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

The government do not support this amendment moved by the member for Wentworth. This amendment makes NBN Co. subject without express exception to the FOI Act. The government are committed to transparency and scrutiny of our NBN policy, so we have agreed to have NBN Co. subject to the FOI Act with appropriate protection for its commercial activities. I indicate to the House that the government will be opposing the amendment moved by the member for Wentworth but we will be supporting the amendment to be moved by the member for Melbourne.

I indicate to the House that it might be convenient for members of the House for the amendment moved by the member for Melbourne to be considered immediately after this amendment is dealt with, given that, it is my understanding, the opposition will not seek to divide on the remaining amendments moved by the member for Wentworth and, I would assume, will support the third reading of the act.

The government has agreed to support amendments being moved by the member for Melbourne to subject NBN Co. to the FOI Act with the same exemptions that apply to other government business enterprises like Australia Post. This is just a common-sense provision, one that maximises transparency whilst ensuring that we protect the confidentiality of NBN Co.’s commercial activities. It is worth pointing out that NBN Co. is not covered by the FOI Act because the act does not apply to Corporations Act companies—which NBN Co. is—which are not prescribed authorities. Prescribed authorities are entities which are by default covered by the FOI Act. So, contrary to some coverage of this issue, no decision was made by the government to exempt NBN Co. It is exempt simply because of its identity as a Corporations Act company. The government opposes the amendment of the member for Wentworth because it considers that it is too broad and disregards NBN Co.’s legitimate commercial interests.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

I must correct the minister. He said that the amendment of the Greens—and I appreciate we are effectively debating these together—will put NBN Co. in the same position as Australia Post. That simply is not true. Division 1 of part II of the Freedom of Information Act is titled ‘Agencies exempt in respect of particular documents’. It lists, for example, the:

Australian Broadcasting Corporation, in relation to its program material and its datacasting content …

So the commercial activities of the Australian Broadcasting Corporation—and it does engage in quite extensive commercial activities, as we know—are not exempt from the Freedom of Information Act. It refers to the:

Australian Postal Corporation, in relation to documents in respect of its commercial activities …

I would encourage my friend the member for Melbourne to listen to this because I am trying to save him from an embarrassing blunder here. Section 7, subsection (3)(a) defines ‘commercial activities’. It is said to mean:

(a) activities carried on by an agency on a commercial basis in competition with persons other than governments or authorities of governments …

So it is only the activities of Australia Post that are competitive with other companies’ activities that fall into that definition.

However, the Green-Labor amendment proposes to insert the NBN Co. in this list of agencies that are exempt in respect of particular documents and to state that the NBN Co. is exempt in respect of documents in relation to its commercial activities, but to define ‘commercial activities’—in a new subsection, 3A, to go into section 7—as meaning activities carried on by NBN Co. on a commercial basis. A ‘commercial basis’ really means any basis other than a charitable basis, so—the member is shaking his head, but I can assure him I am right here—any basis on which the NBN Co. is providing services in return for reward is clearly a commercial basis. It is not going to be providing services for free. Given that the entirety of the NBN’s activities is conducted on a commercial basis, no documents would fall outside of this exemption.

So the government has gone to the Greens and said, ‘Oh, look, that amendment you’re proposing which is the same as the opposition’s is just a little too broad; we can tighten it up a little bit and you’ll still get what you want.’ But the NBN Co. will be, for all practical purposes, completely exempt from the Freedom of Information Act. So the amendment of the Greens which we are going to consider after this and which we will divide on, we will vote against it, is a solemn farce. It is an insult to this House. It is a con. The Greens have been sold a pup. The party that claims to have been part of the group to ‘let the sunshine in’ is in fact a party to the government locking it out.

Our amendment on the other hand, as I said earlier, will make the NBN Co. a prescribed authority and, hence, an agency covered by the act, with all of the traditional exemptions, including those relating to documents that are commercial-in-confidence and commercially valuable. All of those exemptions will be there, and appropriately so. Our amendment, which I commend to the House, will let some sunshine in to the NBN Co. The Greens amendment will lock it out forever.

Question put:

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

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

by leave—I move together amendments (16), (18) and (19) circulated in my name:

(16)  Clause 96, page 79 (lines 13 to 15), omit the clause, substitute:

96 Public Works Committee Act

                 NBN Co is taken to be an authority of the Commonwealth to which the Public Works Committee Act 1969 applies under section 6A of that Act.

(18)  Schedule 1, clause 1, page 82 (line 6), omit “(1)”.

(19)  Schedule 1, clause 1, page 82 (lines 12 to 25), omit subclauses (2) and (3).

Amendment (16) has substantially already been dealt with today in the motion about the Public Works Committee but it would have substituted a new clause 96 to have the NBN Co. taken to be an authority of the Commonwealth to which the Public Works Committee Act applies. I will not repeat the arguments I made about that earlier today in respect of the motion.

The other amendments are designed to ensure that the ability of the NBN to go into retail businesses is limited. I am referring now to page 82. The aim would be, for example, that an NBN company would not be able to buy a retail carriage service provider at all. Under the current proposed bill the NBN would be able to acquire a retail carriage service provider but dispose of it after 12 months. There is no justification for that, because, frankly, if they were to buy a company that had fixed-line infrastructure but had a retail service business attached to it then it would not be very challenging to so agree that the retail service business would be disposed of prior to the completion of the acquisition. This is another example of the rigorous, belt-and-braces approach we are taking to ensure that the NBN is genuinely a wholesale-only business. What we are proposing here is entirely consistent with the objects of the act. There is simply no need for the NBN to be able to hold or control a retail service provider for any period at all.

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

The government does not support these amendments. Amendment (16) is to change the fact that the bill makes the NBN Co. exempt from the Public Works Committee Act. The amendment moved by the member for Wentworth attempts to remove that exemption. He is still proceeding with this amendment in spite of the fact that the parliament carried a resolution earlier today to establish a joint select committee, which will be chaired by the member for Lyne, to look into these very issues. It is an extraordinary proposition and, frankly, I am surprised that the member for Wentworth continues to pursue this position, which has already been rejected by this parliament once today.

The government does not support amendments (18) and (19). As drafted, the bill contemplates that NBN Co. might purchase other companies where this might help in the rollout of its network and the provision of high-speed broadband services. However, NBN Co. is required by the bill to be a wholesale provider, a rule that would breached if NBN Co. acquired a company with retail operations. NBN Co. would therefore need to put in place transitional arrangements for divesting any acquired retail operations. Under the bill, there is a 12-month window for such transitions, a period that the government and NBN Co. consider to be reasonable and that is long enough to avoid NBN Co. having to engage in fire sales at possibly reduced prices. The proposed opposition amendment removes the period within which NBN Co. must divest the retail operations. The effect of this would be to prevent NBN Co. from acquiring a business that has retail operations until that business had divested its retail arm. This would likely lead to delays in the rollout. There seems to be no real justification for such an amendment and it would have the effect of promoting fire sales, to the benefit of others, while limiting NBN Co. flexibility. The government does not support this amendment, as it does not support the other amendments which have been moved which attempt to constrain the success of NBN Co. Those opposite are determined to undermine the NBN. Of course, the Leader of the Opposition gave the member for Wentworth the task of destroying the NBN. These amendments, which are designed to undermine the success of the National Broadband Network, should be rejected by this parliament.

Question negatived.

Bill, as amended, agreed to.

Bill read a second time.