Wednesday, 28 October 2009
Consideration of Legislation
I seek leave to amend a motion relating to government business notice of motion No. 2.
I move the motion as amended:
That the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is exempt from the order of the Senate of 13 May 2009 relating to the consideration of legislation, enabling consideration of this bill to proceed in accordance with the standing orders.
This motion is about allowing the Senate to deal with the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 and is designed to overcome a Senate order of 13 May, originally moved by Senator Minchin and deemed to apply to the bill. This Senate order has the effect of preventing any debate on bills relating to the National Broadband Network until the government produces the ACCC’s formal report on NBN proposals to the NBN panel of experts and the final report to the government from the NBN panel of experts on submissions to the NBN.
This Senate order has been interpreted as applying to the recent telecommunications competition and consumer reform bill on changes to the existing telecommunications regulatory framework. In effect, this means that the Senate will not be able to debate this bill on telecommunications regulatory reform. I think that this interpretation of the Senate order is broader than even perhaps Senator Minchin imagined. I am asking the Senate to support this motion to ensure that important reforms to improve competition and strengthen consumer safeguards can be considered by the Senate independently and separately of any bills which specifically relate to the rollout and regulatory design for the NBN. In other words, I do not believe this bill is captured but, acknowledging the position and the interpretation, I seek to move the bill forward.
The telecommunications regulatory reforms that we have announced are designed to fundamentally reshape and improve competition and consumer regulation in the telecommunications sector as a whole in the national interest. These reforms are required, independent and irrespective of the NBN. They are significant reforms in their own right and are long overdue. The editorial today in the Australian notes:
... the Telco sector in Australia is not a truly open market. It is Telstra’s protected position that is finally being addressed ... after two decades of policy failure.
It goes on to point out that those opposite have no policy, are totally confused and are defending a monopoly position. We have been very clear that during the rollout of the NBN, and after, the existing regulatory regime which regulates the industry as a whole will remain important for delivering services in the interests of all Australians, consumers and businesses.
As we announced on 7 April, the government are committed to addressing the fact that the existing telecommunications regime does not work effectively to achieve its goals and is failing businesses and failing consumers. The regulatory reforms in this bill are critical and are urgently required to inject competition and better consumer service standards into the telecommunications industry now. On this need, the facts speak for themselves.
A report published this month for the US Federal Communications Commission, FCC, showed that Australia came fourth last in price, ahead of only Poland, Turkey and Mexico, on a weighted average of all internet access speeds. It also showed that on a weighted average of all broadband outcome measures—price, penetration, speed—Australia came 18th out of 30 OECD countries. These sorts of results are consistent with the most recent OECD statistics. We cannot wait to improve the state of competition in the telecommunications market. We cannot wait to give the ACCC the powers it needs to regulate the telecommunications sector more effectively. And we cannot wait to put in place a stronger consumer protection regime.
These reforms have been developed as a result of an extensive consultation process over a 15-month period. We have received over 200 submissions, more than even Senator Minchin’s press release tally.
Believe it or not, Senator Minchin, someone has done a little more work than you. There was almost unanimous support for the measures in the response to the regulatory reform discussion paper we released on 7 April. The government have listened to these views and we are now taking action. Every day that we delay these reforms is a day of higher prices and less choice for consumers and businesses—less choice and less innovation. It will delay stronger powers for the ACCC to act on anticompetitive behaviour. It will delay the strengthening of consumer safeguards around the provision of voice and payphone services.
Since the measures in the bill were announced on 15 September there has been overwhelming support for these reforms. The Australian Information Industry Association CEO, Ian Birks, representing Australia’s $100 billion per year information technology industry, warned just last week: ‘Obviously, any kind of slowdown in the acceptance of the legislation and the delivery of the NBN has a detrimental effect on how quickly we can achieve the benefits of a digital economy.’ The Australian Telecommunications Users Group said last week: ‘ATUG believes these changes are needed now to deliver better outcomes for end users, better prices, service and innovation.’ A joint industry statement released late last week by Optus, iiNet, Transact, Internode, Vodafone, Primus, Macquarie Telecom and Netspace said:
The communities that will benefit most are those that are most disadvantaged by the lack of competition today, especially rural communities that have seen their choice of communications provider diminish in recent years in the face of resurgent Telstra market power. On the other hand, the cost of a delay is real, immediate and an impost on all Australians. Delaying the passage of the legislation until next year would mean benefits would not flow until 2011 at the earliest. There is also a risk that the legislation might never be passed if the opportunity we are presented with today is not seized.
It is the government’s view that Telstra’s high level of integration has hindered the development of effective competition in the sector. Telstra is one of the most highly integrated telecommunications companies in the world across a range of telecommunications platforms. Its level of vertical integration raises concerns about the extent to which Telstra has the ability and incentive to favour its own retail business over its wholesale customers when providing access to various services—and you know it is true, Senator Minchin. It also owns the only fixed line copper network that connects almost every house, as well as the largest cable network, half of the largest pay TV provider and the largest mobile phone network. The OECD has concluded that Telstra’s horizontal integration has reduced the development of facilities based competition in Australia in comparison to other countries and has contributed to Telstra’s domination in the market. The reforms in the bill address these concerns while still providing Telstra with the flexibility to choose its own path.
The bill also includes the measures necessary to rebalance the regulatory framework, which has been criticised over the years as being overly cumbersome and unable to deliver sufficient certainty to drive proper investment in infrastructure. The operation of this regime has long been problematic. Access seekers have been frustrated by constant delays and disputes. More than 150 access disputes have been lodged with the ACCC in relation to telecommunications, compared to a total of only three disputes across all other regulated sectors. In order to correct this clear imbalance, the bill proposes reforms to the telecommunications access regime that will make the process more streamlined and less vulnerable to opportunistic procedural delays. This will provide greater certainty to both access providers and access seekers.
The failure of the regulatory regime is directly impacting on consumers. As recently as last week the Telecommunications Industry Ombudsman released its statistics for the 2008-09 financial year. These statistics indicated a further deterioration in the level of customer service in the telco sector, with a 54 per cent rise in total complaints. There was a 57 per cent increase in internet related complaints and a 40 per cent increase in landline related complaints.
The reforms in the bill are particularly important for consumers and small businesses, including those in rural and regional Australia who rely on these services greatly and are disproportionately affected by the inadequacies of the existing regulations. In developing this package, we have considered the report by the Regional Telecommunications Independent Review Committee, chaired by Dr Bill Glasson, set up by the previous government of which Senator Minchin was a member. The regional review committee’s final report urged the government to consider the separation of Telstra and measures to deal with its horizontal integration, including owning an HFC cable network. So the very committee set up by those opposite said, ‘Go out and do this,’ and those opposite are now turning their backs on their own committee. The regional review committee emphasised that measures to deliver competitive choice to consumers should be pursued as a policy goal and that this is an important element of providing regional Australians with equitable services.
The regional review committee’s report also urged the government to design measures to strengthen the USO and provide a stronger mechanism to deal with the removal of payphones and increase incentives for providers to meet the customer service guarantee standards. There is clear evidence that people in regional and rural Australia stand to gain from the reforms. The most recent ACMA published report for the March 2009 quarter found that, for payphones provided under the universal service obligation, only 59 per cent of faulty payphones in remote areas were repaired within the three-day period specified in Telstra’s standard marketing plan. This compares to 82 per cent repaired within two days in rural areas and 91 per cent repaired within one day in urban areas. For new fixed telephone connections, 84 per cent were provided by the universal service provider within the customer service guarantee time frame for remote areas. This compares to 90 per cent in urban areas. Arguing against considering this bill is arguing against the need to address this unacceptable level of service provided to consumers and businesses in regional Australia.
As I indicated to the Senate yesterday, the government has supplied all of the information it can responsibly supply to comply with the order. I understand the concerns of Senator Ludlam and the crossbenchers because the previous government abused the process of commercial-in-confidence to hide what they were up to. It was unacceptable. I understand very much why there are concerns about this and there are important issues at stake here. Even as I accidentally tabled information which should not have been tabled, information that was blacked out, it demonstrated exactly why the government has concerns it has in this area. Telstra was required to make a statement to the Stock Exchange after inadvertent information came to light, but both of the issues can be separated out. I accept and acknowledge that commercial-in-confidence has been abused in the past and senators are right to ask questions about this and want to ensure that they are getting genuine commercial-in-confidence excluded and not material that the government does not want. I absolutely accept that.
One of the other issues that was raised is the processes that will be followed going on from this. I give a commitment to the chamber that the government will not be looking to bring on the second reading debate until the first week back after the break. The second reading debate will take place then. I will be in Egypt at a UN conference that week, so we will not be seeking a vote that week. We will be seeking a vote the following week when I return. I want to outline for all that there are some natural constraints as well as some Senate procedure constraints about the process.
I say quite genuinely, Senator Minchin, that there is genuine worldwide interest in what we are doing, and a number of countries have spoken to me about our broadband project, our regulations and our changes. I can tell you that there is genuine interest around the world.
There was one other issue that was concerning the crossbenchers and I want to make sure I address it. I want to assure senators that the reports to the government contain extensive commercially sensitive information provided by the NBN proponents on the understanding that it would be kept confidential. A disclosure of that information might discourage future participation in government tender processes. The report of the panel of experts contains detailed descriptions of the proposals received and a detailed assessment of each of the three national proposals against the evaluation criteria. It includes references to funding required to deliver on the proposal, proposed structure and financing arrangements, ownership, commercial feasibility and financial models, technical capability, pricing and business strategy. Release of the commercially sensitive information by the government would cause proponents commercial harm. Proponents involved in the tender process have confirmed that release of the parts of the panel’s reports to government that reveal and discuss their proposal would cause them commercial harm. The release of such information would be particularly harmful in the current environment where a range of parties are entering into commercial discussions on how they wish to participate in the NBN.
The National Broadband Network request for proposals was a robust process conducted in accordance with the requirements of the RFP and the Commonwealth procurement guidelines. The government’s decision to terminate the NBN RFP process was on the advice of the panel of experts that none of the proposals offered value for money. I am confident that the process has been run to a high standard and in accordance with the relevant guidelines. I also note that after the Senate order came into effect the Auditor-General announced that the Australian National Audit Office would conduct an inquiry into the RFP process. The government welcomed the Auditor-General’s announcement that the ANAO would conduct a performance audit of the National Broadband Network RFP process. The audit commenced in late June 2009 and will be completed in the coming months. I am afraid the Auditor-General’s office have not told me when they are going to finish, so I cannot pass on the information.
I want it to be clear that there are genuine commercial reasons why we cannot comply with the order to the extent that is being requested. The explanatory memorandum of this bill and the second reading speech given in the other place talked about the NBN in the context that, once it is rolled out as a wholesale-only network, it will fundamentally transform the competitive dynamics of the telco sector. Both of these documents acknowledge that this historic nation-building investment will help transform the Australian economy and create the jobs and the businesses that we need to succeed in the 21st century. So I urge the Senate to support this motion. It is not an attempt to subvert the will of the previous motion, as I think Senator Minchin would even acknowledge. The interpretation placed was a broad-ranging interpretation. I do not believe that resolution ever intended to capture this bill, so I seek the support of all senators in voting to bring on this bill.
I inform the Senate that it is the opposition’s very strong view that the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 should remain subject to the Senate’s order for the production of documents, that the order has not been complied with and that the Senate should not consider this bill until the government does comply with this order. Therefore, the opposition will oppose this motion. The government has treated the Senate with contempt over this matter and should not be relieved of the burden of complying with this order. The Senate order from which the government is seeking to exempt the current bill was adopted by the Senate on 13 May 2009. The order noted that the Minister for Broadband, Communications and the Digital Economy had shown contempt for the Senate as a result of his failure to comply with the Senate order of 4 February 2009 which called for the production of documents relating to the National Broadband Network tender process. The order then called on the ACCC’s formal report on the NBN proposals to the NBN panel of experts and the final report provided to the government from the NBN panel of experts on submissions to the NBN process to be provided to the Senate by 6.50 pm on 13 May 2009.
The Senate agreed that, should the minister fail to comply with this deadline, further consideration of NBN related legislation—any NBN related legislation—would be listed for debate on the sitting day after these documents were provided. The Senate’s motivation for adopting the May order was quite straightforward: the government’s justification for breaking its election promise to contribute $4.7 billion to a fibre-to-the-node network and committing no less than $43 billion to a fibre-to-the-premises rollout was that the expert panel, with advice from the ACCC, had recommended that it do so. The government went out of its way to rely on the expert panel and its report as justification for this dramatic and extraordinarily expensive policy change. Thus the Senate properly decided that it wanted to examine the documents before considering any NBN related legislation.
Until this week, some five months after the Senate agreed to this order, the government has not even mentioned this Senate order aside from calling it a stunt. They have not pushed the case for urgency on the Telecommunications Legislation Amendment (National Broadband Network Measures—Network Information) Bill 2009 before the Senate nor discussed with any senators how they could meet the terms of this order within the constraints of commercial sensitivity. Upon introduction of this bill in the Senate, its consideration was adjourned until the provision of the documents specified in the order.
Now the Clerk of the Senate has had a look at the content of the second reading speech and concluded, as has the coalition, that there is absolutely no doubt that this bill relates to the National Broadband Network. For a start, the government itself asserts that this bill stems from its discussion paper entitled ‘A National Broadband Network: regulatory reform for 21st-century broadband’, which was released on 7 April this year when it announced its NBN mark 2 proposal. Secondly, the government is now arguing that this NBN discussion paper satisfies the requirements of the statutory review required of Telstra’s operational separation. So it has deliberately linked the structure of Telstra, the subject of this bill, to its NBN. Thirdly, there are over 150 references to the National Broadband Network and NBN Co. in the explanatory memorandum and second reading speech.
This evening the minister himself could not help but refer repeatedly to the National Broadband Network in arguing that this bill had nothing to do with the National Broadband Network. So there can be no denying that this bill is related to the NBN. Everyone knows this bill is about holding a gun to the head of Telstra in order to force it to help make the NBN viable. We all know that the government cannot afford to have its NBN compete with Telstra and that it needs to acquire Telstra’s assets for its NBN to work—hence this bill.
When announcing the introduction of this legislation and the extraordinary change of policy in regard to the separation of Telstra, Senator Conroy gave us no doubt about the link between this legislation and the NBN when he outlined Telstra’s very dubious choices under this bill. Senator Conroy stated:
For example, it—
may involve the creation of a new company into which Telstra could transfer some of its fixed-line assets.
Alternatively, it may involve Telstra progressively migrating its fixed-line traffic to the NBN over a period of time and under set regulatory arrangements, and for it to sell or cease to use its fixed-line assets on an agreed basis.
He went on to say:
This approach will ultimately lead to full structural separation over time.
Such a negotiated outcome would be consistent with the wholesale-only, open access market structure to be delivered through the National Broadband Network.
Minister Albanese in his second reading speech on this bill in the House of Representatives said:
Our commitment to a wholesale-only model for the NBN will deliver structural reform in the industry in the longer term. However, the government considers it vital to ensure that, during the transition to the NBN, the existing regulatory regime generates outcomes in the interest of consumers and businesses.
He also said:
The government has commenced constructive discussions with Telstra on how NBN Co. and Telstra could work collaboratively towards the NBN. We believe that we can work towards achieving a solution in the national interest that also meets the interests of Telstra and its shareholders.
The link between this bill and the NBN is paramount. The explanatory memorandum, on page 8, is clear about the government’s intentions:
As the nation moves to superfast broadband it is the Government’s clear desire for Telstra to vertically structurally separate, on a voluntary basis—
in the transition to the NBN to be consistent with the structure of NBN Co.
I could go on with, as I said, more than 150 examples from the explanatory memorandum about how this bill relates to the NBN. It is therefore clearly subject to the existing order of the Senate and should not be excluded.
Senator Conroy has only realised in the last week that the Senate cannot be taken for granted and that it will not be a rubber stamp for his poor policy decisions, especially given the significant lack of detail. It is only within the past four days that Senator Conroy has started to nuance his discussions about this bill away from the NBN, although he failed miserably tonight to separate his bill from the NBN. Until last week, Senator Conroy was quite explicitly tying this bill to his National Broadband Network. In a doorstop interview last week Senator Conroy said, in relation to the legislation:
What we need is certainty for Telstra investors, the market in general so that we can get on with delivering a world class broadband network to all Australians.
As we have seen through the Senate inquiry into this bill, it is not just the coalition and the Clerk of the Senate who recognise that this bill is inextricably linked to the NBN. The evidence presented to the committee from those supportive of the legislation left coalition senators in no doubt that these legislative proposals are inextricably linked to the NBN. The Executive Chairman of the Competitive Carriers Coalition, David Forman, confirmed this during the Senate committee hearing when he said, in response to a question from Senator Birmingham, who is in the chamber tonight:
If you suggested to me that the NBN was likely to succeed in the absence of this legislation I would suggest that that is a pretty big bet.
The investment company Maple-Brown Abbott described this bill as:
… a high risk strategy to deliver the NBN and more competition in the telecommunications sector. It runs the risk of damaging Australia’s sovereign risk rating as well as stifling investment and innovation in the telecommunications sector. It places too much power in the hands of the ACCC.
The reason that we, the opposition, lodged this return to order initially in February is that it was obvious that the government was hiding behind its tender process to avoid answering any questions about its now abandoned $4.7 billion fibre-to-the-node election commitment. The minister took on notice at estimates question after question about the NBN mark 1, using the cover of the tender process to avoid answering any questions about the $20 million tender process. When the government officially abandoned NBN mark 1, it announced NBN mark 2 and made it explicitly clear that it had, in large part, based its decision on the report of the expert panel, as advised by the ACCC.
On 7 April, when announcing its abandonment of its election commitment to a fibre-to-the-node network, the government released just a three-page extract from the NBN expert panel’s evaluation report, despite asserting that its decision was based on that report. Of course, in attempting to comply with this order of the Senate, Senator Conroy has this week tabled some additional information, which the whole world now knows about, with his extraordinary mistake in tabling highly sensitive ACCC information on the network. So he tabled information that he should not have but monumentally failed to table information that he should have to comply with this order. What the minister has now done is again tabled the three-page extract previously released plus, in his great generosity, an additional 13 pages of the evaluation report. Of course, the additional material supplied, paltry as it is, provides very little further detail.
During Senate estimates in May, it was revealed that the evaluation report totalled no fewer than 893 pages, and the flimsy document that the minister has tabled consists of just 16 pages from those 893 pages. He has tabled just 1.5 per cent of the report’s contents. He has omitted 98.5 per cent of the contents of the evaluation report on which he said the government had decided to move from a $4.7 billion commitment on behalf of taxpayers to a $43 billion commitment on behalf of taxpayers. There is absolutely nothing in the material released by the government to confirm that the panel advised the government to commit to a $43 billion fibre-to-the-premises rollout, let alone the reasoning and rationale for such advice. The only hint of any further advice was observation 10, which was released to us:
The Panel can see a way forward to achieve the outcomes sought by the Government and has provided that advice in confidence to the Government because of the commercial sensitivities arising.
We, with our experience in government, never expected that this government would provide commercially sensitive information, but this incompetent minister has, of course, inadvertently done so. As he said, despite releasing that information, it is important to protect information that is genuinely of a commercially sensitive nature. But we do and did expect that the government would table in the Senate the relevant sections of the expert panel report on which the government relied in deciding to announce a $43 billion commitment to build, own and operate a fibre-to-the-premises broadband network. It is quite unbelievable for the minister to claim that 98.5 per cent of the evaluation report contains commercially sensitive information which cannot be released to the Senate. Who does he think we are? That is a ridiculous assertion.
In the Senate yesterday, Senator Conroy, in an effort to deflect attention from his extraordinary incompetence, tried to allege that it was because the Senate asked for this information that he stuffed up and tabled commercially sensitive information. Apparently it was all the Senate’s fault for holding the government to its own commitment to openness and transparency. The minister has used the excuse of commercial confidentiality as the reason not to keep the public informed about his NBN plans. In his statement provided to the Senate yesterday, Senator Conroy stated the release of such information would be particularly harmful to the current environment, where a range of parties are entering into commercial discussions on how they wish to participate in the NBN—or, in the case of Telstra, how they will be told to participate in the NBN. The paradox is that, as I said, yesterday the minister tabled the most confidential information of all but failed to table the information the Senate reasonably expects to see before considering NBN related legislation. As I say, to assert that 98.5 per cent of the contents of the evaluation report on which this decision was based cannot be released for commercial reasons is an absolute nonsense.
The coalition will not support this attempt by the minister to exempt this bill from the Senate’s order for the production of documents. The government has made it very clear that this bill is about how it can make its NBN work, and the minister gave the game away tonight when he spent half his time talking about the NBN in arguing that this bill had nothing to do with the NBN. I must say that until the government cooperates with the Senate order in good faith we will not be supporting any attempts to exempt the government from its obligation to provide the Senate with open and transparent information about its decision to commit up to $43 billion of taxpayers’ money to its National Broadband Network. We in the Senate are the guardians of the taxpayers’ interests. This government is expecting the Senate to consider and, in its view, pass NBN related legislation that will commit taxpayers to a $43 billion infrastructure project. This Senate has a right to have available to it the information upon which the government has decided to make such an extraordinary decision before it considers legislation to give effect to the government’s wishes. If the Senate were to agree to waive the application of this order to this bill, this government would continue to treat Senate orders with the contempt that it has displayed so far.
We are listening to both sides of this debate and there is no doubt that the NBN legislation, when it comes, will be predicated on a motion from the Senate requiring information—not all of which the government has furnished to the Senate. The progress of the legislation, which this motion clears the way for, is not guaranteed by this motion passing—if it were to—tonight. The Minister for Broadband, Communications and the Digital Economy is not here, which I think is not a good situation. It would help if the minister were able to reiterate the government’s concession in terms of providing information to the Senate, but it does raise the question of commercial in confidence.
Mr Acting Deputy Speaker, you will know that the current opposition when in government was never inclined to be forthcoming with information of this sort—not ever. As soon as it was in the commercial interest to keep something under cover, it was not available. Here we now have the Labor government doing the same thing and the opposition is cavilling about that. There needs to be an in camera process for senators and staff to be able to look at commercial-in-confidence information when it is important for deliberations on processes, such as those we are engaged in here, which are important for the whole nation.
In all of my parliamentary life one bane that has been consistent is governments of both persuasions resorting to commercial-in-confidence excuses for blocking from going to parliament information that is required for proper decisions to be made. The coalition cannot escape responsibility for being part of that block. When it comes to freedom of information legislation and indeed to questions on notice to parliament one of the most frequent guises for not supplying information, one of the greatest excuses by ministers for not giving information, is that it is commercial in confidence. One knows there is a reasonable limit in which secrecy of, for example, patents and sometimes resource bases are necessarily critical to a company’s wellbeing, but that is very often not the case when it comes to commercial-in-confidence matters. It is simply that the private sector does not want to have the same scrutiny that they expect of the public sector.
Freedom of information ought to have been legislated long ago for the private sector as well as for the public sector because the private sector—as we have just witnessed from the global financial crisis and the need to put its way billions of dollars from the public sector as with the stimulus packages, which are getting up towards $100 billion of taxpayers’ money—is very, very dependent upon the largesse of taxpayers. It cannot resort to secrecy then when taxpayers’ representatives in the form of senators want to look at information which is critical to making decisions. The government has released some information but it has not released a great wad of other information on the basis of commercial-in-confidence reasons and it puts us in an impossible position. We do not want to hold up legislation that is essential to the delivery of good telecommunications to this nation. On the other hand, we do not want to have to debate issues where we do not have basic information that is fundamental to that decision making.
As advocates of full and open disclosure at least to the people making the decisions, we do not find the commercial-in-confidence excuse washes. I think the government should look at that again. The minister is absent from the chamber at the moment—I am sorry; he has come into the chamber and he is involved in discussions. We are in a really difficult position here. The Senate has made an order for the delivery of documents. Those documents relate to the National Broadband Network, not specifically to the legislation the government wants to bring on now. Yet we ought to have that information by now. We will continue to look at the merits of both sides and we will make our decision, if not before, when the bells ring.
Debate (on motion by Senator Xenophon) adjourned.