Ron Boswell (Queensland, National Party) Share this | Hansard source

We are debating the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, which provides for Telstra to structurally separate. After listening to Senator Minchin, we could be forgiven for thinking that we were in the previous East Germany, where people just went in and took other people’s property.

The amendments we are debating today are all about forcing Telstra to prop up the government’s friendless $43 billion NBN mark II proposal. The government is trying to legislatively bully a publicly listed company, a company with 1.4 million shareholders, around 30,000 employees, and 9 million customers. The bill seeks to prevent Telstra from acquiring of specific bands of spectrum which could be used for advanced wireless broadband services unless it structurally separates and divests its hybrid fibre coaxial cable network and its interest in Foxtel.

If this publicly listed company refuses to comply with the minister, the bill then provides for a functional separation of the company on terms defined by the minister. This is the same minister who said that NBN services would be rolled out before the end of 2008. This is the same minister who wasted 18 months and $30 million running a tender process that had no prospect of producing an outcome. This is the same minister who committed to a $43 billion NBN project made with no business plan and who refused to do a cost-benefit analysis despite the calls from the Productivity Commission and the Business Council of Australia for a cost-benefit analysis of the government’s massive spending proposal. And it is the same minister who stole $2½ million from rural Australia for their Future Fund, and that will never be forgotten. That $2½ billion was placed in the Future Fund to update telecommunications in rural Australia, and that was just knocked off.

In May last year, during Senate estimates, Senator Conroy was asked about his position on structural separation. He replied:

I am not advocating it. I have never advocated it.

We are debating the minister’s bill here today which goes to structural separation. There is separation happening here all right: separation between the minister and good policy. While the minister heavies Telstra shareholders, to have his way with their fixed line customers, consumers are moving to wireless services in droves, which further undermines the business case for a fixed line NBN to 90 per cent of the population.

Labor made a huge mistake in cancelling the coalition’s rural and regional broadband network project, OPEL, which would have seen new services delivered this year to around 900,000 underserviced premises. The coalition was set to invest $958 million in that project, with the private sector contributing a further $1 billion. That would have included the rollout of 15,000 kilometres of new open access fibre-optic backhaul into rural and regional areas. That plan, the OPEL plan, would have been completed by the end of last year.

Senator Conroy is directly responsible for nothing happening, and he is very good at that. The coalition in government required the accounting and operational separation of Telstra, but the coalition has never supported the calls for a structural separation of the company. The structure of the company is a matter for the company and its shareholders. What would happen if the government decided to structurally separate a major financial institution or a mining company? There would be uproar in the stock exchange.

Who is going to be the next to shake hands with ‘the dead hand of socialism’? I understand that expression was a senior minister’s solution last year to make Telstra behave over the plan for a superfast national broadband network. The senior minister said, according to Lenore Taylor:

The dead hand of socialism is always open to us …

That is the hand we are being dealt in the Senate today. Labor also wants to end the horizontal separation of the company by forcing the company to divest its HFC cable network and its interests in Foxtel—unless, of course, the minister determines otherwise.

I read yesterday that some unions were outsourcing their membership recruitment. Perhaps Senator Conroy should follow their lead and outsource some of his ministerial responsibilities. The outcome could only be better than what we have in front of us today. Not concerned with the splitting of a listed company down the middle and then slicing it sideways, Senator Conroy is also trying to prevent Telstra from acquiring specific bands of spectrum which could be used for advanced wireless broadband services. Denying Telstra future advanced spectrum will mean that there is no upgrade path. Given that Telstra has the largest network in the country, this is likely to have the greatest impact on rural and regional customers. The government is taking this extra punitive action despite the ACCC’s advice that no specific legislation changes are required to address the competition concerns in relation to the allocation of spectrum.

If Telstra is negotiating with the government in good faith, why is the parliament being asked to set a course in legislation that may be rendered redundant once the negotiations have concluded? The bill before us asks the parliament to give wide powers to the minister and the ACCC over the existing operation of the telecommunications network. This may fundamentally change as a result of the decision taken in response to the NBN implementation study. The cart is before the horse, and both the cart and the horse are going nowhere fast.

The lack of consistency in government policy must be making investors tear their hair out at the threat to sovereign risk. If only they could have believed Senator Conroy when he said about Telstra in 2007:

It’s a private company. Structural separation is more a matter for the board of Telstra, the shareholders of Telstra and the management of Telstra.

If only investors could have believed the minister on April Fools’ Day 2008, when he was reported as saying, on structural separation:

I often get asked why we don’t just do it. It’s because Telstra is a private company. It isn’t a government-owned company any more.

In May 2009 he told an estimates committee:

I have certainly never advocated structural separation …

Yet here today in the Senate we are debating legislation for the structural separation of Telstra. How can we believe anything the minister says? Telstra was sold as a fully integrated telecommunications company. While the prospectus identified that there were regulatory risks attached to the purchase of shares, none of these extended as far as warning about potential horizontal separation, the divestiture of Foxtel and the HFC network, nor that Telstra would be excluded from future spectrum allocation. The move to deprive Telstra of access to additional spectrum in the Next Generation mobile broadband service unless it structurally separates and toes the government line has not been subject to appropriate policy considerations, particularly its impact on the mobile sector and customers in regional and rural areas.

A healthy Telstra is important to this country for so many reasons, not least because it invests far more capital than its share of revenue would suggest. That means that the other companies are not investing but are happy to take the revenue. While Telstra generated around 57 per cent of industry revenue, it accounted for 71 per cent of industry capital employed in the financial year 2008-09, including all consolidated business. Over the five years to June 2009, Telstra invested more than $23 billion of capital. That is 70 per cent of the total industry investment—significantly higher than Telstra’s 62 per cent share of the industry revenues over that period.

Because of Telstra’s scale and capacity as a national vertically integrated incumbent, it can support the provision of services in many uneconomic areas of rural and regional Australia where other providers choose not to go or invest. If Telstra is restricted from providing these services, who is going to provide them? The government will have to pay—and do not hold your breath waiting for a Labor government to invest in rural and regional infrastructure in Australia. The Rudd government has already abolished the $2.4 billion Communications Fund established by the coalition for a telecommunications upgrade in rural and regional Australia. That was straight-out theft, and Telstra’s NextG mobile network provided by far the broadest geographical coverage of any network. Starving Telstra of spectrum will mean rural and regional Australia will be deprived of faster and higher capacity services.

Once again, rural and regional Australia are being asked to pay the price of Labor’s incompetence on telecommunications, and its wilful neglect. Even the unions are unhappy. The national president of the Communications Electrical and Plumbing Union said: ‘We’re pretty concerned about what this might do for the jobs and conditions of the tens of thousands of people we represent in Telstra. If Telstra’s revenue streams are impacted, there will be pressure on jobs and conditions.’ He is right about that.

Telstra is also home to the investments of many Australian super funds—and woe betide any government that acts to devalue their future. The editor of the Sydney Morning Herald said on 8 October 2009: ‘In fact, all Australians have a stake in Telstra’s future, thanks to the investments made by their superannuation funds or the government’s substantial holding of shares in the Future Fund.’ The structural separation of Telstra is against the interests of all Australians. I urge the Senate to reject this legislation.