Monday, 21 March 2011
National Broadband Network Companies Bill 2010; Telecommunications Legislation Amendment (National Broadband Network Measures — Access Arrangements) Bill 2011
I am pleased to rise and speak on the National Broadband Network Companies Bill 2010 and related bill this morning. It is nice to be speaking about something positive. I cannot unconditionally declare Australian Greens support for these bills, because this is very much a work in progress. I understand there are a certain number of government amendments that have not yet been circulated, which I think are designed to address some of the concerns that the committee had—but, because we have not yet seen those amendments, it is very difficult to pass judgment on them. So I am going to keep my comments fairly general.
This debate has been several years in the pipeline. What we are hoping is that this debate will close the long and drawn-out preliminary phase of the rollout of the National Broadband Network. If the parliament ends up supporting these bills, I think it is safe to say we will be in new territory. As the construction schedule ramps up, and the network begins to light up around the country, I am strongly hoping that two things will happen. Firstly, the new joint committee will be investigating how well the predictions in the NBN business plan actually map onto reality. Up until now we have been discussing a hypothetical infrastructure project, a broadband network that existed only on paper. That of course is beginning to change. Anyone who spent any time at all going through the business plan will have noted the extraordinary scale-up and size of the workforce in the middle and the later years of the rollout implicit in the concept of taking this project past 93 per cent of premises in the country.
Passing these bills, if the parliament does so, will put us onto the on-ramp. And now, of course, it is incumbent on the parliament to hold this government to its word, remembering the old adage that no battle plan survives contact with the enemy—or, in this case, with reality. I think the joint committee will be an important part of that accountability process, and I congratulate Senator Xenophon for putting that idea forward as part of his agreement with the government late last year. I look forward to working with the new chair, Mr Oakeshott, and the rest of the committee members as that work gets underway.
I think the second thing that will happen is that the debate will shift from questions of competition policy and disputes over competing commercial self-interest to the uses to which Australians will actually put this network. That is the debate that I think most of us have really been looking forward to. With the rules of conduct settled, we get down to the really interesting question: what will the Australian people, businesses, educators, health professionals, environmental consultants, transport planners, energy utilities, artists, musicians and community broadcasters do with this technology? We have been joined this morning for the debate by a couple of classrooms full of students—good morning! This network is for these folk, and I am interested to know what young people will do with this technology, because it is something that we have simply not seen before in Australia. I will return to some of these questions at the end of my remarks, but I mention them here with a sense of anticipation because I think we are going to see remarkable things.
I would also like to note at this point that the release of the exposure draft was a good idea. I think that is generally good practice. We support that principle, and the government was able to deal with a lot of issues and concerns that the industry raised—and some quite significant concerns that the Greens raised. That means that most of what we are debating today is, while not quite at the margins, not quite the big-picture issues that have been dealt with.
I would like to deal with some of the specific issues, some of which Senator Birmingham raised in his speech. I know that there were some coalition amendments circulated to deal with some of these issues. As I said at the outset, I believe there are government amendments about to be circulated that will attempt to address some of the issues that I am going to canvass here, and that Senator Birmingham canvassed, but I will go through them in general and we will have to wait until the committee stage to see what the government has come up with.
We support in principle the provisions of the bill in relation to cherry picking, with some reservations. The economics of the National Broadband Network are premised on the principle of cross-subsidisation, and that has underpinned public works in Australia from the beginning—for the last century or so, really—whether it be water, gas, roads, electricity or postal services. And despite attempts to roll back this principle, we are strongly supportive on grounds of equity. Basic services and utility services should be the same cost whether you live in Wentworth or Wiluna. That is something that markets, and sometimes governments for that matter, are not always capable of or interested in providing. The government’s intention here, we understand, is to use the easy markets to subsidise the hard ones which private companies would not find profitable. We saw with the HFC rollout that we had two competing telecommunications carriers rolling parallel networks down parallel streets in the lucrative parts of the country while ignoring everywhere else. That is the kind of infrastructure provision that we are not interested in providing here. I have found a few hardline ideologues on the far Right who object to this interference in their ethereal free market, but most people seem to accept the idea of using cross-subsidisation to push metro quality services well out into regional areas. This of course gives rise to some very hard questions about how to treat market participants who turn up in future to overbuild the NBN in lucrative inner-city areas without taking on the public interest obligation of providing services in unprofitable markets in the bush. This is a network for everybody, and we agree with that. Our view on this matter is in alignment with the government: it should be prevented unless certain, very strict conditions are met.
Telstra has proposed amendments repealing the cherry-picking provisions entirely, in an irony that the Senate Environment and Communications Legislation Committee found quite entertaining—and it is perhaps the strongest confirmation we have had yet that the provisions should stay just as they are. Reservations, though, are that players like PIPE Networks and TransACT were not trying to cherry pick, and I do not think the government intended to catch them. These are people who were here already; they were trying to run businesses well before this new network came along. The government is proposing exemption criteria which will condition the way in which the cherry-picking provisions apply. This is one of those areas where, at the moment, we do not have any indication of what those are—we will have to wait and see whether that is going to work.
The committee spent quite a bit of time discussing the issue of discrimination, volume discounts and efficiencies. This is a very serious issue because it threatens to undermine the whole point of the network or at least return us to the bad old days where a monopolistic incumbent favoured one provider over another with volume discounts. These deals always seem to end up favouring the large over the small and end up consolidating market power in fewer and fewer hands. At this stage I have to give the benefit of the doubt to the government and acknowledge that it was quite clearly not the government’s intention, but plenty of submitters raised it as an issue and we still do not have a solution or anything on the table to show that this will not occur.
Whether it comes to a committee stage amendment when we get around to debating this tomorrow, we are very keen that these matters be reported in detail every so often. The Greens introduced into the CCS bill we debated late last year provisions for a rolling review. We reserved the right to bring these issues back to parliament if the provisions are not working as intended. If it turns out that either volume discounts or other discounts are being applied unfairly and it is disadvantaging certain players in the market—generally speaking, from past experience they will be advantaging large players at the expense of smaller ones—then we want those things reviewed. We reserve the right to bring those provisions back to parliament if the market is dysfunctional and not working as the government intended.
I understand that the government certainly does not intend for that to be the case. We are looking for a monopoly provider at the wholesale level and as much competition as we can manage at the retail level. That seems to be the model the government is pursuing. But, if it does not work out that way, then we will not have too much time to fix it. That is going to need to be repaired.
The committee also spent a great deal of time considering the issue of scope creep, the expansion of the NBN Co. out of its wholesale box and into retail markets. The questions really are: who gets to buy layer 2 services, do they have to be a reseller, can they onsell it to others and can they use it for their own good? Although it is very evident that it is the government’s intention that layer 2 is the layer in the stack that NBN Co. will operate at, it is actually spelt out nowhere in the legislation. It is an assumption. It is another issue that many submitters raised.
From my point of view the committee hearings were quite useful in clarifying this issue. As you would expect, Telstra and Optus ran strong arguments objecting to any perceived scope creep. The thing is though that, if a utility needs the services from NBN direct, it should be able to get them. It is for the management of networks, whether they be electricity networks or water networks. I do not think anybody really believes that Water Corporation in WA and the electricity networks around the country plan to become telco resellers. We are reasonably confident that allowing utilities to buy these services for the provision of network management services only maintains the integrity we are seeking to keep.
Selling to anybody with a carrier licence probably is a little more complicated, but if a retail service provider or Telstra or Optus want to bid against the NBN Co. in the utility business to provide that service because they think they can value-add and provide justification for their mark-up and for being there, they should be absolutely entitled to do so. With the drafting of the bills at the moment they can do that. They are not prevented from competing. It is just that NBN Co., if the utilities want them there, will be in that space.
The same goes for an entity with a carrier licence intending to buy these services for their own internal use. If a RSP can bundle up services, value-add and justify the mark-up that they will place on them then it should have the right to bid for that business, as the bill allows. The question, of course, is: should these entities be forced to deal with a retailer who will insert themselves into the value chain with their own mark-up if their services are not required? That is a difficult one. The submitters who put their case rested their arguments on the greater public benefit of competition without recognising that actually competition still applies; they are free to compete. Given the depth of feeling around the issue, this is another one we would like included in the review. If there is ambiguity about whether those matters will be reported on under the amendments we placed into the CCS bill last year then we want it explicitly spelt out so that the parliament, the general public and the industry know whether the provisions are being abused.
Senator Birmingham addressed freedom of information in his remarks as well. This issue has had quite a lot of airtime since David Crowe in the Australian Financial Review revealed that NBN Co. would not be caught by the Freedom of Information Act because of its status as a corporation rather than a government department. The government argued that it did not intend to exclude the NBN from freedom of information legislation; it just happened to turn out that way. So it negotiated with us to bring it into the domain of FOI. We sought to fix this issue in the House of Representatives, and I thank the government for the spirit in which it went into those negotiations and the House Independents, who supported the Greens amendments.
What we sought to do was to have the NBN treated the same way as any other government business enterprise, whether that be CSIRO or Australia Post, which carries out part of its operations on a commercial basis. We tweaked the definition of ‘commercial practice’ as it is currently read in the FOI Act to remove reference to competition—since, as a state monopoly, the NBN will not actually be in competition with anybody—but we still wanted the normal operations of the act to apply.
Senators might have noted—Senator Birmingham certainly did—the highly critical comments of Mr Turnbull on the way through the House debate. He pointed out that the way in which modern interpretation of the FOI Act treats commercial information means that we were according NBN Co. an unacceptably low threshold of disclosure. I admit that that is something that disturbs me as well. I had not been aware that it was something that kept the conservative side of politics awake at night, but I will take the point. Commercial information is accorded almost sacred status in the FOI Act and elsewhere in public policy. The assumption is always against disclosure. No harm to anyone needs to be demonstrated. It is as though commercial secrecy should automatically trump the public interest.
I should say that our reading of the drafting of the FOI Act is that it is not even commercial secrets that need to be withheld; it is commercial information—anything relating to the running of the business should automatically be precluded from public disclosure. So it is an attitude curiously at odds with theories of free markets which assume that everyone in the market is given maximum access to information so that they can go out and make their rational, self-interested decisions. That strand of thinking obviously never made it into the FOI Act. I recognise that these concerns stray well into a different portfolio and are not strictly a concern of the communications minister, who just wants to get the bill through. But I think we will need to open this issue up again in the committee stage when we get to it tomorrow, to have the FOI Act itself amended to make sure that, as far as NBN Co. is concerned, the presumption is that commercial information will be released unless it can be demonstrated that some harm will be caused if it is released.
I think applying some kind of threshold test so that the assumption is not automatically that disclosure will be refused is probably the best way to strike the balance. The coalition are proposing amendments that provide complete exposure to NBN Co. to freedom of information requests, and I think that that is straying too far in the other direction. So we are going to try and find somewhere in the middle that allows commercially sensitive material, or material which would be destructive if it were released, to be withheld. Those arguments can be made and appealed. But let us do away with this blanket of secrecy that somehow accords sacred status to commercial information just because a business is being run.
I am hoping that that will satisfy the concerns of the opposition. I am hoping it meets the objectives of the government to presumably not have NBN Co. opened up to repeated hostile or malicious FOI requests, or whatever the concern is. Hopefully we will set something of a precedent in the way that the FOI Act operates as well.
On the issue of privatisation, I will only revisit these clauses briefly to note that it is the very strong view of the Australian Greens and many others that this network should stay in public hands. So that I am not accused of just playing to some vague left-wing stereotype, I would like to spell out why we believe this. The simplest explanation is one of purpose of the NBN Co. itself.