House debates

Thursday, 25 November 2021


Telstra Corporation and Other Legislation Amendment Bill 2021; Second Reading

11:42 am

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

I rise to speak on the Telstra Corporation and Other Legislation Amendment Bill 2021, and I move:

That all words after 'That be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes:

(a) this bill seeks to preserve the operation of a range of regulatory obligations imposed on Telstra following its privatisation;

(b) it was the Liberal-National government that privatised Telstra;

(c) the privatisation of Telstra, in the view of many communities, had an adverse impact on regional telecommunications services; and

(d) that Labor’s decision to structurally separate Telstra, and establish a wholesale-only National Broadband Network, was a response to these failures of privatisation policy; and

(2) calls on all members of the House to acknowledge the Liberal-National privatisation of Telstra, as a vertically integrated monopoly, was not in the national interest".

I'd like to begin with a quote:

It is good to see that the National Party have extracted this deal.

…   …   …

The National Party has used this position of leverage to get both the money on the table and the legislation on the table to fix the problems. That is what the National Party does. We are few in number but we managed to extract a deal and I sit here today with my colleagues proud of what we have achieved.

Members may be wondering when this statement was made and by whom. It was made on 14 September 2005 during the second reading debate on the Telstra (Transition to Full Private Ownership) Bill by the now Deputy Prime Minister. This was the last step in the then Senator Barnaby Joyce selling out to the Liberals and agreeing to the privatisation of Telstra as a vertically integrated monopoly—a process which began in 1996.

This was a bad day for competition policy, a dark day for infrastructure investment and an afront to common sense. It is arguably one of the most counterproductive pieces of communications legislation passed by this parliament to give effect to one of the most flawed public policy decisions since Federation. It was a day when we were told that the regulatory obligations imposed on Telstra would serve the public interest and deliver the services and infrastructure investment that Australia needed. As we now know, those assurances from the then Senator Barnaby Joyce turned out to be non-existent. Telstra is no longer a vertically integrated monopoly, because after a decade of dithering by the coalition the Labor Party structurally separated it, and we did so in the national interest and in the name of competition policy.

The bill currently before the House arises from Telstra as a private entity seeking to restructure its business to better align the management and operation of its assets within its T22 strategy. This time, the restructuring is one that Telstra is pursuing of its own accord rather than in response to government. Telstra has publicly stated its plan to restructure the company into separate legal entities. These entities include the Telstra Group, InfraCo, TowerCo and ServeCo. These entities will hold different classes of assets and operate at different layers of the network stack.

The explanatory memorandum notes:

Telstra does not require Government approval to undertake the restructure. However, without legislative and regulatory change, a range of key obligations that currently apply to Telstra would become ineffective or cease to apply to the successor entities.

As such, my understanding is that this bill primarily seeks to address three key issues that arise from Telstra's proposed restructure. Firstly, to repoint Telstra-specific obligations that would otherwise cease to apply to new Telstra entities to the entities in the Telstra Group. Secondly, to introduce a ministerial directions power that enables the minister of the day to direct the demerged Telstra entities to fulfil their existing regulatory obligations or assist in the delivery of the obligations of another Telstra entity. This can include cooperation between entities to fulfil regulatory obligations or to uphold obligations in the NBN Telstra definitive agreements. Thirdly, the bill has been drafted to ensure the integrity of the facilities access framework is upheld and that restructuring does not inadvertently move assets outside the scope of the regime.

Furthermore, the explanatory memorandum of the bill states:

The Bill has been developed on the principle of regulatory equivalence—that is, the regulatory obligations that currently fall on Telstra should also fall on the entities in the new corporate group in roughly the same way. While Telstra is free to restructure its business as it sees fit, successive Parliaments have placed and maintained a range of obligations on that business, and it is important that these remain effective.

This is an appropriate principle which Labor supports. However, I interpret this to mean equivalence not just in a purely technical or legalistic sense but in a practical sense too. That is the lens we have applied to the bill. Based on briefings I have received from the Department of Infrastructure, Transport, Regional Development and Communications and from Telstra, I am satisfied that the proposed measures in the bill give effect to regulatory equivalence and, in circumstances where unforeseen issues could arise, the bill affords the minister the necessary direction-making powers to deal with them. There has clearly been a lot of technical consideration put into this bill, and I want to thank those who provided briefings.

I note that the proposed authorisation provisions would extend the existing authorisations to Telstra's successor companies so that the agreements or conduct continue to not contravene the anticompetition provisions of the Competition and Consumer Act 2010. This authorisation would only apply to agreements with the sole purpose of extending existing obligations to successor companies and to authorise conduct to give effect to such agreements. I understand that both NBN Co and Telstra are not satisfied with the tight drafting of this section of the bill, specifically the sole-purpose test.

The Senate committee report noted that the department advised it is considering amendments to authorisation provisions to 'provide appropriate limited additional flexibility'. No amendment appears to have been forthcoming in the House. It is a matter for government as to whether they wish to reconsider amendments in the Senate on this particular matter. It should also be noted that Telstra has been proactive in identifying employment related issues and bringing them to the attention of policymakers. Separate instruments in the Senate will deal with the grandfathering of employment benefits for Telstra employees and, based on my consultations with the unions representing these workers, I am satisfied those issues are being adequately dealt with. As such, Labor will support the bill.

Talk about the structure of Telstra and its regulatory obligations conjures up many memories. You would be hard pressed to find a group of people more unqualified on broadband, technology and telecommunications competition policy than the Liberal-National coalition. You cannot trust them to manage public money, you cannot trust them with competition policy and you certainly can't trust them on technology. Those opposite do not believe in engineering and economics; they only believe in politics.

Let's just rewind a little and look at how this all began. In the mid-1990s, the Liberal-National government began the process to privatise Telstra as a vertically integrated monopoly. The now minister for communications was one of the original architects of that flawed policy. This damaged competition. It degraded customer service. It starved the regions of much-needed investment. But apparently this was all acceptable because then Senator Joyce had extracted a deal that would address all the problems. Well, how did that deal work out? What problems did that deal solve? What long-term outcomes did that deal achieve? By any objective measure, it was a total failure. The deal extracted nothing of enduring significance.

This is why the Liberals and Nationals were then forced to develop broadband policy after policy to try and address the problems they had created. True to form, those policies, if they could even be called that, got worse and more bizarre on every attempt. Labor's decision to establish the National Broadband Network was a direct response to the failed Liberal-National privatisation of Telstra. True to form, the Liberals tried to wreck the NBN too. They criticised the satellite option, they abandoned fibre, they attacked universal wholesale pricing and they misled the country with the 2013 strategic review. History now records that not only did they get each major decision wrong but they were wilfully dishonest through the entire process.

For all their endless talk and meandering lectures, neither Mr Turnbull nor Minister Fletcher understood the construction side economics of the NBN. Critically, they never understood the cashflow implications of the technology choices governments made either. It doesn't matter if you wear grey suits and if you wave your finger around when talking, and I assure you it doesn't matter if you write mini books about the history of the internet. What matters is the quality of your decisions, your ability to bet the big calls right and your ability to conduct yourself in an honest manner through the course of the public policy debate. If you can't do that, which hasn't been done, then in public policy terms you are as useless as a chocolate teapot.

This government abandoned fibre and backed a second-rate copper NBN on the basis that it would cost $29.5 billion. That cost first increased to $41 billion. Then it increased to $49 billion. Then it increased to $51 billion. And now it has cost $57 billion. This was truly, if there ever was one, a masterclass in incompetence and technological mismanagement. The abandonment of fibre was never about cost; it was always about the politics. One side, Labor, went with a particular technology, and the other side, the Liberals, felt compelled to oppose it. Every time the multitechnology mix had a cost increase, which was many, many times, the minister and his predecessors would concoct a new set of untruths about the original fibre plan for the NBN to try and distract the media from their failures. This fundamentally dishonest scam, conducted over seven years, was decimated on the front page of the Sydney Morning Herald in February this year. Consider this: the minister said the multitechnology mix 'would be delivered five years faster than the original plan and would save taxpayers $30 billion'. Then he claimed:

We committed to a turnaround—with the NBN to be rolled out four years more quickly and for $30 billion less than under Labor's plan …

It's very notable that the minister has been unwilling to repeat his claims ever since they were comprehensively debunked. That in itself is an admission the minister wasn't misinformed but knew he was misleading all the time. He is a diminished figure as a result.

Quite recently, the Guardian also reported figures which the government has fought to keep secret for seven years indicating that the fibre-to-the-node and HFC rollouts have been between 2½ and three times more expensive than originally assumed in the strategic review. The Liberals claimed that HFC technology would be a game changer. Well, it was, but for all the wrong reasons. The HFC experiment has descended into the most expensive deployment of its sort in the world and the most unreliable. The government was forced to abandon the Optus HFC network because it wasn't even fit for purpose. NBN Co then had to halt the HFC rollout on the Telstra infrastructure, because switching on a vacuum cleaner was enough to cause the internet to drop out through noise ingress. And since that time NBN Co has sunk almost a further billion dollars into it, because the HFC architect didn't have enough capacity.

Then, we have the copper network. We were told the copper network would deliver minimum speeds to all Australians by 2016. That was the promise. Well, it's nearly 2022, and fibre to the node is still not delivering basic minimum speeds of up to 25 megabits per second for up to 200,000 premises across Australia. NBN Co can't even tell the Senate when this basic minimum requirement, which actually happens to be set out in law and in their own Statement of Expectations, will actually be delivered.

What was even more amusing, even before the government had completed the NBN rollout, was the minister had been forced to backflip into a fibre overbuild because NBN is worried about the impact of 5G. Consider that, just for a moment: imagine spending $50 billion on a second-rate network, launching tirade after tirade against fibre, and then crawling back to the very thing you had been arguing against all those years. This is not simply a vindication of sound Labor policy but an affirmation of something more fundamental: the Liberals get the big calls wrong, and Australians suffer every time they do it.

COVID has demonstrated that reliable, quality high-speed internet is not a luxury or a 'nice-to-have'; it is essential 21st century economic infrastructure. Families need reliable fast connections for school and work. Small businesses and entrepreneurs need it to stay competitive. Regional communities need it for all those reasons and as a matter of safety. As it stands, Australia is today ranked 59th in the world for average broadband speeds and is ranked 32 out of 37 nations in the OECD. This is just not good enough, and it has all happened under the Liberals' watch. Australia deserves a government that sees and uses technology as a tool for social and economic transformation, and that is what Labor will deliver.

That's why, just last week, the Labor leader and I announced that, if elected, a Labor government will keep the NBN in public ownership for the foreseeable future and expand fibre access for up to an additional 1½ million homes and small businesses. There is a technology repair job that needs to get done, and public ownership provides NBN Co with the certainty to do that job. We will invest $2.4 billion to boost fibre access in each state and territory, ensuring over 10 million premises across Australia—that's 90 per cent of the fixed-line footprint—have access to gigabit speeds by 2025. This investment, consistent with the accounting treatment of NBN Co, will be funded through a combination of Commonwealth loans, free cash flows and equity, if determined appropriate. The optimal financing mix in capital structure will be determined in government.

This policy will run fibre into the street and give Australians who rely on copper wire connections now the choice of having fibre connected to their home. If they want those faster speeds, then their NBN copper can deliver. Owners of these properties, who are mainly in the outer suburbs of our cities and in regional areas, were short-changed by the coalition when it took an axe to Labor's original fibre design. It is estimated that up to 660,000 premises will be in the regions benefitting from this plan and 840,000 in the suburbs. Fundamentally, this is about expanding the much-needed technology repair job that's already underway. At the end point of this, 7½ million Australian households and businesses will be on a full fibre connection or have access to a full fibre connection if they require fast speeds, and nearly seven in eight premises in the fibre-to-the-node footprint will have fibre access.

This is a plan that is focused on the future and seeking to make the future a more equitable and better one. Labor believes that the next decade should be one where Australia makes things here again, becoming globally competitive in industries such as advanced manufacturing. A key element of our A Future Made in Australia plan is a reliable, high-speed national broadband network to allow Australia to seize the digital industrial opportunities before us. I therefore support the bill.

Photo of Kevin AndrewsKevin Andrews (Menzies, Liberal Party) Share this | | Hansard source

Is the amendment seconded?

Photo of Matt ThistlethwaiteMatt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | | Hansard source

I second the amendment and reserve my right to speak.

Debate adjourned.