Wednesday, 24 November 2010
Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010
Debate resumed from 23 November, on motion by Senator Feeney:
That this bill be now read a second time.
We are dealing here with the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, a piece of legislation which is directly related to the government’s plan to see $43 billion spent on a National Broadband Network which could well become the most ginormous white elephant in the history of Australia. The government wants to see $43 billion spent on a National Broadband Network without doing any sort of cost-benefit analysis, without going through any proper process to ensure the best way to deliver fast and affordable broadband to the Australian people. We are all in favour of fast and affordable broadband for the Australian people, but we are also very respectful of the value of taxpayers’ money. Taxpayers have to work hard to pay the taxes the government collects from them, and if you have a government that is trying, willy-nilly, to throw money up against the wall, there is a job to be done by the Australian Senate to properly scrutinise the activities of that government.
Over the last three years we have seen an enormous amount of government secrecy. It was pretty bad when Kevin Rudd was Prime Minister but, after this most recent election when Labor nearly lost, we were promised by the new Prime Minister, Ms Gillard, that things would change. We were promised a new era of openness and transparency, but nothing of the sort has happened. Things have gone from bad to worse when it comes to government secrecy, and this government is desperately trying to cover up stuff-up after stuff-up after stuff-up. But one thing has changed: in the last parliament the then Minister for Finance and Deregulation, Lindsay Tanner, was bragging that they would not be pursuing a cost-benefit analysis before committing $43 billion worth of taxpayers’ dollars. The new Minister for Finance and Deregulation, Senator Wong, quite appropriately has come to the view that there ought to be a bit of scrutiny of the activities of the Minister for Broadband, Communications and the Digital Economy, Stephen Conroy. Very appropriately, she has taken the view that some scrutiny, some audit activities and an independent review need to take place before going ahead. If the government is having second thoughts, if the minister for finance is having second thoughts, on the process related to the NBN so far, then the parliament is entitled to have second thoughts and we should delay further consideration of this legislation until the independent review report and the business case for the NBN have been shared with the Senate and the Australian people.
I would like to follow on from the comments that Senator Cormann has made on the common sense that should be applied to the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, to the business case and to NBN Co. across the board. I do not think we have seen common sense since early 2009, when the then Prime Minister, Kevin Rudd, announced as something of a thought bubble that Australia was going to have, amongst many other wonderful things that no-one else had, the very best broadband network in the world. I make the point that the coalition is absolutely committed to making fast and affordable broadband available to all Australians, regardless of where they live. It is just that we do not think NBN Co. is the way to do it and we do not think that this government has a clue as to whether this is the way to do it. It is simply a horse that they have got on which is galloping off, and they cannot work out how to get off.
I note that the Australian people, many of whom have rejected the opportunity, at great cost, to be involved in the new broadband system, have a lot more sense than this government in this area. I quote from a letter to the editor in the Australian today. It says:
I wonder if Senator Conroy would agree to tie his parliamentary pension to the economic success or otherwise of his National Broadband Network.
Heavens to Betsy; someone wants to actually hold the Minister for Broadband, Communications and the Digital Economy accountable for what he is doing but, no, the government certainly does not want to. I am also a bit concerned that apparently the Prime Minister now believes that Senator Conroy is not up to the job of negotiating this. She has had her own meetings with Senator Xenophon and Senator Fielding in a last-ditch, desperate attempt to convince them—without a business case, without signing documents that would have bound them to secrecy for seven years or whatever the last date was—to just trust her on this. Why on earth would anyone trust Senator Conroy or the Prime Minister on the NBN Co. issue?
The challenge here is to develop an affordable, effective broadband system, a fast broadband system that minimises expense to taxpayers and ensures that all Telstra shareholders are treated fairly and equally. We do not have the evidence for either before us know. We are told we can have the government’s response to the business case on 17 December. As I said in this place yesterday, we do not really care when we find out about the business case but we will not pass the legislation until we do, because we cannot analyse the cost-benefit to Australia. On every scale that is currently available to look at, there is no reason to believe that it has been done well. If you go back to the introduction of it, when it was a thought bubble with no business case, no plan, no strategy, developed by then Prime Minister Rudd and Senator Conroy, it was just a wish. If you keep looking, you see that the government is putting all of its bets on one technology—in fact, in a bizarre way, paying Telstra to replace Telstra’s own current technology in parts of regional Australia. What a bizarre proposal. Does this make you want to trust this government? Does this make you trust that they know what they are doing? It goes on and on. There is no cost-benefit analysis and, until there is, the Australian people, and certainly the coalition, cannot accept that this is the way to go.
We look at body after body which could have assessed this program for the government. There is the Productivity Commission. We are still saying: ask the Productivity Commission to look into it. The Productivity Commission are absolutely the right body to look into this. The government have referred dozens of other programs to the Productivity Commission to do an insightful and forensic analysis of the costs and benefits. Why not this one? Why will they not put this one to the Productivity Commission? Another body that could have looked at this proposal and given us a practical, thoughtful, experienced response to it is Infrastructure Australia and yet the costs and benefits of the biggest piece of infrastructure ever proposed in Australia are outside the remit of Infrastructure Australia.
All we want is to establish the facts and to allow an impartial body to assess whether this investment—just remember it is the largest investment of taxpayer funds ever—is a good idea. The business community along with the general community want a cost-benefit analysis of this National Broadband Network project. The ANZ chairman, John Morschel, has said:
… the lack of a business case and full publicity of that business case is throwing a lot of doubt in people’s minds about the level of expenditure.
Just remember we are talking about $43 billion here. The chairman of Wesfarmers, Bob Every, has said:
I’m not convinced, and feel it needs a cost-benefit analysis …
We have under-invested in infrastructure for the last 30 years, in road, rail, water. I just see this as another part of infrastructure that we need to go through, stocktake and prioritise. And I do not know if it—
It being the NBN—
will rank in priority.
This is the chairman of Wesfarmers, one of Australia’s biggest companies. He is not, as Senator Conroy would have us believe, crying out for faster broadband. It is just not happening. I think the most bizarre comment of all from the minister, Senator Conroy, is that it would be ‘too costly’ to have an inquiry by the Productivity Commission into NBN Co. How bizarre. What will it cost? Let’s pick a figure, say, $10 million. The Productivity Commission has said it has enough money in its current $36 million budget to do it. They could do it. That is fine.
We do not know, of course, how much the government has paid for its last little foray in having an analysis of the analysis in terms of having outside oversight of their business case, but we do know that they spent $25 million alone with McKinsey KPMG on an implementation study which, as has been worked out by one of my colleagues, was $46,000 a page. I think the Productivity Commission could probably bring it in at a slightly lower page rate than that. Yet we have a minister, who wants to spend $43 billion, telling us that it is too expensive to get the Productivity Commission to do a study of whether the $43 billion is being well spent, what the outcome will be, whether it is an effective use of taxpayers’ money and whether it will stand up in the future. No-one knows what will stand up in the future, but the Productivity Commission is the best possible organisation to ask about the implications of this project. They can factor in non-financials as well as the other potential benefits of spillovers.
As I said earlier, the coalition has absolutely no problem with fast, effective, affordable broadband. It is our policy to do this. It was our policy to do this in a sensible way. We did not want a Rolls Royce with bells and whistles. We were of the view that a Holden or perhaps a Ford would do the job but, certainly, an Australian made and sensible solution, not some sort of put all your eggs in one very, very expensive gold basket solution, which is what we have with Senator Conroy’s project. I would like to note that the Secretary to the Treasury, Ken Henry, in September last year said:
Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing. That is, when taxpayer funds are not put to their best use, Australia’s wellbeing is not as high as it otherwise would be.
I continue to be very concerned that we have this massive spend on a new technology that may very well be completely out of date within 20 years, which is when the minister seems to think we should be progressing on this subject.
The coalition, of course, has some extraordinary concerns about the structure of NBN Co. We were the government that broke up what was a massive government owned monopoly, Telstra. Why on earth would we assist this government to establish a new and massively more expensive monopoly? The government are setting up a massive monopoly that is so anticompetitive that they have had to exempt it from the Trade Practices Act. Telstra will be contractually obliged not to compete with NBN Co. in order to protect NBN Co.’s revenues. ‘Um, um, um,’ is all anyone can say to this. How bizarre! Telstra will not be providing telephone or broadband services across its HFC pay television cables, yet that is the only existing network in Australia capable of delivering 100 megabits—a network that passes almost 30 per cent of the nation’s households already. No, we will not go for a Holden solution which would use the infrastructure that currently exists where it exists and make sensible use of innovative and new infrastructure where that would be an affordable and sensible solution. No, the government want to proceed on and on with their Rolls Royce.
The NBN is going to be an eight-year, $43 billion project. Surely that deserves a very rigorous cost-benefit analysis. The government and Minister Conroy were at pains numerous times yesterday to tell us about the three-year corporate plan and the 30-year business plan. I am very pleased that this group has a 30-year business plan. I would have been quite comfortable with a 10-year business plan, because of course the technologies that we will be using in 30 years are quite probably not known right now. The speed at which technology is moving forward in this area means that we simply do not know what will be the most affordable and effective means of establishing communication networks into the future.
The government, of course, would have us believe that there is a cost-benefit analysis and they have done it. We just want to see it. This may be very untrusting of us, but we would like to see this cost-benefit analysis. The government might say, ‘Just trust us.’ There is nothing that they have done to date that would make us think that we should do so. The project is being rushed through by the government in the way they rushed through the home insulation scheme, a disaster; the Green Loans scheme, a disaster; and the school halls scheme, the so-called Building the Education Revolution program, which was a waste of money in many, many areas. The taxpayers of Australia did not get value for money out of that program. They got bizarre outcomes where halls were pulled down to put up smaller halls and the like. There were schools with two halls but no library. No-one had any problem with expenditure to assist the development of schools in Australia, but once again this government, with their inability to implement and to understand business, have produced failure after failure after failure and simply wasted the money.
As the writer from Queensland said in that letter to the editor that I mentioned earlier, what about tying Senator Conroy’s pay to the losses or profits of NBN Co.? What about having a performance dividend? Let us look at that. If we tied former Environment Minister Garrett’s pay to the performance in the home insulation area and the Green Loans scheme, I suspect he would be paying us to let him work here now. If we looked at the wastage in the school halls scheme, I think the Prime Minister would certainly be earning about 50 per cent of what she earns now. They have not been successful.
We on this side will not agree to or acquiesce in this legislation without a cost-benefit analysis being done. Primarily this needs to be done by the Productivity Commission. Projects of this size and scale require the necessary oversight and consideration to see that they are being carried out in the most efficient and effective way. You would think that by now the government would recognise this. One does not mind if a new government learns by the odd mistake. It is when a new government has mistake after mistake after mistake and apparently learns nothing that we are in trouble.
This is, as I said earlier, the largest single investment in Australia’s history, and the government tell us it will make a fantastic contribution to the economic activity of Australia, but they have given us no examples and no tangible evidence of how they support this claim. Most of the applications and uses for the NBN that actually add to economic productivity are available on the ADSL2 broadband speeds that we have right now. Certainly let us look at using innovative technology to move to faster and faster communications in the future, but why would you do it in such a way that you have no idea whether it will be overtaken by other technologies, what the effect of it will be and what the costs and benefits of it will be? The government simply do not know.
We cannot assume that the business case they have so secretly hidden away gives them joy, or they would have released it by now. They know how much pressure there is from the Australian taxpayer to find out whether this is a good spend or a bad spend, yet they continue to hide the business case away on the basis that they have to go through it with a black pen to make sure no commercial-in-confidence material comes out. I would have thought that, irrespective of its size, it could not take more than a week—and the government have now had more than two—to do a little black-out exercise on figures that you wish to remain commercial-in-confidence. The government know there is pressure for the release of this, and they are refusing to release it until after the legislation has been passed. The only assumption that I can come to, and one that the Australian taxpayers are increasingly coming to, is that the figures in the business case do not add up and do not provide costs and benefits that are worthwhile for Australia and Australians. Without that cost-benefit analysis, we are opposed.
I think it is time in this debate to restate and to remind the government of a couple of basic constitutional principles. The first of those principles is this: that it is for the parliament to decide and approve the expenditure of public money. And when there is a very large expenditure of public money it is all the more important that the parliament be fully informed of the reasons for that expenditure so that the parliament can form a view as to whether it is a prudent and efficient use of public money.
In the case of the bill before the chamber at the moment we are discussing not merely the expenditure of a very large amount of public money; we are actually discussing the largest expenditure of public money on a single project in Australia’s history. Let me just say that again, because in all of the heat of this debate that point risks being lost: this is the largest expenditure of public money on any project in Australian history. Apart from expenditure on war this is the biggest single thing Australia has ever undertaken. It is the allocation of $43 billion, and that is assuming, by the way, that the government’s figures are reliable. There are many industry experts who say that that grossly understates the amount of public money that it will cost to build the NBN. But taking the government’s own figures as the basis of this discussion—taking them at their word—even on the government’s case this is the biggest single thing Australia has ever done in peace time.
So you would not think that it is an outrageous thing for the parliament to demand of the government that the business case stacks up? It is not an unusual thing for the parliament to demand of the government that it take the parliament, and through the parliament the Australian people, into its confidence about why this particular model was chosen and why this model should be preferred over the range of alternative models. And yet the government arrogantly and dismissively, with utter contempt for parliamentary process and democratic values, refuses so much as to consult the parliament about the business case and the economics for the largest single project in Australian history.
Let me remind you, Madam Acting Deputy President, of a second principle, and that is that it is the obligation of ministers to abide orders of this chamber. And yet the minister responsible for this project, the Minister for Broadband, Communications and the Digital Economy, who is so clearly out of his depth that he is the laughing stock of the industry, was ordered on 17 November 2010 by this chamber to table in the chamber the National Broadband Network business plan and the government’s response to the McKinsey & Company and KPMG implementation study; the business plan being the fundamental document setting out why this particular proposal stacks up commercially and the government’s response to the McKinsey and KPMG implementation study being the government’s own appraisal of the expert assessment by those two professional firms of the way in which this vast project is to be implemented.
But this minister, showing open defiance and contempt for this chamber, has simply said, ‘Well, I refuse to abide the order of the Senate, because I think it is reasonable for the cabinet to consider these documents at greater length before I table them here.’ The minister’s opinion is irrelevant because this chamber, a chamber of which he is a senior member, has already expressed its opinion and it has made an order. A senator who is not prepared to abide an order of the Senate is unfit to be a senator.
The entire history of the development of the NBN has been a history of confusion, incompetence and concealment. The reason there is so much concealment is, I think, that the minister, who is plainly out of his depth, thinks he can try to protect from the critical gaze of the parliament the litany of incompetence for which he is responsible. When we in opposition put questions day in and day out to the minister, Senator Conroy, in relation to this, the most eloquent statement about the government’s handling of this matter is not to be heard in the minister’s attempts to obfuscate and filibuster answers to our questions. The most eloquent statement is to be seen in the mute, sullen and embarrassed silence of his colleagues as this out-of-his-depth minister—this lightweight minister—struggles unsuccessfully to get on top of this project.
The biggest thing that Australia has ever done in peacetime has been placed by this government in the hands of a man who has no business experience, limited intelligence and, frankly, lacks the maturity to deal with a matter of high public policy involving at least $43 billion of taxpayer’s money. Senator Conroy is like a kid with a great big train set. He is incapable of taking seriously the gravity of the responsibility with which he has been charged, and it is no wonder that the public, the markets and his own colleagues have lost confidence in his capacity to handle this.
I spoke a few moments ago about concealment. We know that the business plan was delivered to the government on 8 November: Monday, a fortnight ago. We know that it is a 400-page document. We expect that this 400-page document will contain a degree of technical material. We would expect that it would contain some commercially confidential material. None of that is surprising but, Madam Acting Deputy President Fisher, I know you, like me—indeed, like Senator Johnston, sitting beside me—have been a legal practitioner in your earlier life. You know that a competent professional can get across a technical document so as to identify commercially confidential material and you know, as anybody who has practised in this field does, that that is an intellectually difficult task but it is not something that takes two weeks.
The senior public servants in Senator Conroy’s department who advise the government, I know from my time as a junior minister in the department in its earlier form, are some of the most excellent minds in the country. It is not credible that it has taken more than two weeks for those people to have mastered the technical detail in a 400-page document and to have identified so as to redact any relevant commercially confidential information. It is a task that would take a skilled mind perhaps a couple of days of concentrated work—but not a fortnight. This claim of commercial confidentiality is a ruse. It is a pretext. It is a lie. It is not merely the business plan which this minister and this government, for fraudulent reason, seek to withhold from the scrutiny of the parliament before the parliament rises for the Christmas recess tomorrow.
We learned yesterday that, as well, the government has commissioned another study to examine the business plan itself. That is a study taken by Greenhill Caliburn, a very well known and respected corporate advisory firm. We in the opposition have obtained a copy of the service contract between the Department of Finance and Deregulation and Greenhill Caliburn. Before I go on to talk about what the service contract provides, let me just make the point which my friend Senator Cormann made yesterday in question time: isn’t it interesting that it was not the Department of Broadband, Communications and the Digital Economy that commissioned the Greenhill Caliburn report, but Senator Wong’s department, the Department of Finance and Deregulation?
As you know, Madam Acting Deputy President, is the role of the Department of Finance and Deregulation to keep a close eye on the expenditure of public moneys, and plainly the department of finance had concerns about the business plan so that firm was retained to review it. More specifically, this is the work that Greenhill Caliburn has been asked to do in schedule 1 of their contract: to report on and review the 30-year business case and 2010-11 corporate plan, examining the robustness of key assumptions. Pausing there, Madam Acting Deputy President, as I am sure you know, that word ‘robustness’ is one of the great euphemisms in documents of this kind. Whenever you see a question about the robustness of financial assumptions, what that tells you in layman’s language is: do these figures look just a little bit rubbery? Do the assumptions look a bit dodgy? That is what robustness means in a document like this.
So the assumptions, the robustness of which are being reviewed, include the financial assumptions—in particular, revenues, capital expenditure, operating expenses, assets, liabilities and cash flows—and the operational assumptions, which include NBN Co.’s rollout plan, including market and/or technological capacity constraints that might be relevant—for example, construction, equipment and contracting. You only have to identify the key assumptions, the robustness of which have now been called into question by the department of finance, to appreciate that the very core and being and economic foundation of this business case has been called into question by the department of finance.
As well, Greenhill Caliburn has been asked to review the assumptions on rates of return and capital structure, including NBN Co.’s ability to access private sector debt and quantum; to examine and provide advice on NBN Co.’s assessment of risks and relevant mitigation strategies in the business case and the 2010-11 corporate plan; to provide an analysis of relevant options for key performance indicators, including financial and non-financial targets and ongoing monitoring arrangements for key risks arising from the business case and the corporate plan; to identify any other commercial matters, issues and risks materially relevant to the business case and the Commonwealth’s shareholding in NBN Co.; and, to the extent possible, to appraise the findings of the NBN implementation study against NBN Co.’s key outputs.
What the finance department has mandated, quite properly, is an entire review of every key assumption of the NBN business case to see how robust it is, how dodgy it is, how rubbery the figures are and how tenuous the assumptions are. Yesterday, the shadow spokesman in the Senate on this area, Senator Birmingham, asked Minister Conroy whether the Greenhill Caliburn review would be published, would be made available to the public. After filibustering through the entire two minutes of his question, Senator Conroy at last came to the answer, ‘To complete my answer, Mr President,’ said he, ‘the answer is no.’
What an outrage it is that the parliament has concealed from it until after it rises a business plan. What an outrage that the pretext for concealment of the business plan from the parliament is the lie that it takes more than a fortnight to identify and redact commercially sensitive information in a 400-page document. But even more outrageous, even more incomprehensible is the fact that this minister has now told the Senate that the appraisal of the business plan—to put it in the vernacular, the document that tells us whether or not it stacks up—will not be released to the public.
Greenhill Caliburn are an independent adviser and are not a part of the government. The draft, by the way, was due yesterday and the final document is due by Friday. If the minister gets his way and Greenhill Caliburn come back with a report that says, ‘We have serious concerns about the accuracy of this assumption, the accuracy of this assessment of the rate of return and we have concerns about this particular scenario, which is one of the premises of the business case,’ the Australian people will never be told. The Australian people will never be told whether or not a business case, which has itself been concealed from the parliament, passes independent scrutiny by an independent corporate advisory firm. What a disgrace.
You wonder why Senator Stephen Conroy is a laughing stock in the industry. You wonder why the comment you most commonly hear among experienced people in this industry is that Senator Stephen Conroy has a cargo cult mentality about NBN Co. It is no wonder that his own colleagues have lost confidence in him and he is now increasingly a minister struggling and under pressure—the weakest link in the chain of a very weak government. It is no wonder that the Australian public themselves, $43 billion of whose wealth is in the hands of this incompetent, are concerned. They are increasingly concerned that, whether this is a good idea, whether it is a bad idea, whether the business case stacks up or whether it contains critical flaws, they will never be told because this government has decided to keep the truth from them.
In summing up for the opposition on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 second reading debate, I seek to make a few observations. The most obvious is to debunk the Labor lie—the refuge of those devoid of an argument in this place—that accuses us and the coalition of wrecking, of wanting to wreck broadband. The coalition has a proud and strong record of supporting broadband, but when we ask questions about the wisdom of the government’s particular approach we are lazily and immaturely labelled as wreckers by a government unable to engage on the issues. It seems to think that mere repetition of slogans is going to be a substitute for the evidence that we seek. We are deceptively told that the bill before us does not deal with the National Broadband Network. In fact, the bill does not mention the National Broadband Network. No lesser authority than the Minister for Broadband, Communications and the Digital Economy himself told the Australian people that on national television—so the coalition’s contributions on this bill were irrelevant. NBN was not part of this debate and the bill that we are considering, so the Labor sloganeering went.
Unfortunately for the minister, unlike him some of us actually had creased the back, the spine of the bill. We actually opened the bill. We actually read the bill and, what is more, we did the same with the explanatory memorandum. What that exposed was that the minister himself had not creased the spine of the bill or the explanatory memorandum. It seems that it came as an absolute surprise to the minister on national TV when he was told by Senator Joyce that the bill did, and does, refer to the National Broadband Network and it does not only do so once or twice or five times or 10 times or even 50 times, but 62 times the NBN is referred to in the bill. Yet the minister was not aware of it. The minister did not know.
We have a choice, Madam Acting Deputy President Fisher: the minister either deliberately sought to deceive the Australian people or he simply had no idea that the NBN was referred to in the legislation. I will allow the minister to make the determination as to which it was. I confess I am one of the more charitable on this side of the chamber and therefore I am willing to punt on the latter. Why? Because the minister is ignorant. Question time after question time he has proven that for us. Indeed, if ignorance were a crime, then Senator Conroy would be convicted each and every time beyond reasonable doubt by a unanimous verdict. But in political terms this gross and negligent ignorance is in fact criminal. This is the minister in charge of the $43,000 million NBN rollout, and that $43,000 million comes to roughly $2,000 per man, woman and child in this country. It is all one huge taxpayer liability run by this minister.
By the government’s own appalling standards Minister Conroy is starting to break away from the pack in the ministerial incompetence stakes. The competition is fierce. There is Minister Garrett of pink batt fame; there is Minister Carr of ‘cash for clunkers’ fame; and indeed there is the Prime Minister herself with her Citizens Assembly for Climate Change, so Minister Conroy is competing in a very well pedigreed field in the 2010 ministerial incompetence stakes. But with this NBN and his TV gaffe, he is really is breaking from the field and developing an unassailable lead.
It would be all quite laughable if it were not so serious. When their incompetence is highlighted, the minister and his colleagues chant their hackneyed focus-group-tested slogan of ‘wrecker’, but in doing so they throw that silly slogan by implication at the OECD, respected economic commentators, respected industry doyens and respected industry players. It seems we are to believe that the OECD are all wrong and bow to the superior intellect and knowledge of the minister who does not even know what is in his own legislation. I do not think so.
Not only is the minister ignorant of the content of his own bill, it seems that his colleagues do not trust him either. That is why the minister, unbeknown, had to have the NBN business plan subjected to an independent assessment by the Minister for Finance and Deregulation. We welcome that assessment, but it will all be too late. The business plan of the NBN will be revealed but only after the parliament rises and after the government asks us to vote for this bill. Might I just divert here and say that, as I understood the minister’s response to a question this week, the actual assessment of the business plan being undertaken by Greenhill will in fact not be made publicly available.
So what we have is a situation where, if I might say with respect, there is no business plan. No business plan ever says that things are not rosy in the garden and that you should not proceed. It is always written in hope with great faith that everything will go well. That is why, I must say, it was wise to seek that independent assessment. But of course that independent assessment now is not going to be made available to the parliament or the Australian people. What we as a coalition fear is that this minister will continue to try to control the levers of the NBN, its rollout and this legislation.
Need I remind anybody in the event there is any doubt that this bill does in fact deal with the NBN that the facts speak for themselves. Sure, the minister has not opened the bill to read it or the explanatory memorandum, but I would have thought that he may have bothered to read the second reading speech on this legislation by his colleague Mr Albanese in the other place. Had he done so, he would not have had to read far at all. Indeed, he would have had to go only to the second paragraph of the second reading speech. The second paragraph of Mr Albanese’s starts as follows:
The National Broadband Network will fundamentally transform the competitive dynamics of the communications sector in this country.
Of a nearly two-page speech, the NBN would be referred to—just on the first page—at least half a dozen times. It is peppered with references to the NBN, yet this minister goes on national TV and asserts, ‘the NBN is not mentioned in the bill; it does not refer to the NBN,’ when his own colleague in the other place has already spoken on the bill and says, ‘Yes it does.’
Let us remember that the legislation is called the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010. When Senator Conroy’s colleague in the other place talked about the ‘competitive dynamics of the communications sector in this country’, he was right on the money, right on target, as to what this bill deals with—the NBN.
Our questioning of this bill relates to our support of broadband and the health of the Australian economy. Labor somehow thinks that, because they have this grand vision of the National Broadband Network, there is no need for a cost-benefit analysis or for it to be placed under strict scrutiny. Let us not forget that this very same minister—Senator Conroy—went to the Australian people in 2007 claiming that he could do all these wonderful things with broadband for an investment by the Australian people of a bit over $4,000 million. It has now ballooned to 10 times that figure, to $43,000 million. I think a cost-benefit analysis is a very good idea, not only for a $4,000 million project but also for a $43,000 million project.
Let us remember Labor’s mindless mantra of ‘evidence based policy’. Remember that great line from the 2007 election? There is no business plan, no government response to the implementation plan, no analysis of the business plan—in fact, no evidence has been put before us other than this minister’s wholesale incompetence. Neither is the business plan being referred to the Productivity Commission. I would have thought anything with the initials ‘PC’ would have of necessity attracted the Labor Party, but they must have realised that on this occasion ‘PC’ did not stand for political correctness; it stood for something substantial—namely, a proper analysis by the Productivity Commission. As a result, when they hear the initials ‘PC’, Labor recoil in horror, because the idea of having scrutiny placed on anything is a matter of great concern to them.
The same government that provided this mantra on openness and transparency is now denying access unless senators—and only a few chosen ones—sign up to a seven-year non-disclosure agreement. Then, with a bit of pressure, it was brought down to a year, then a few weeks. I give full credit to Senator Xenophon for not signing up, and I trust other crossbenchers will not either. The duplicity in Labor’s mantra and then in their actions, I must say, is breathtaking.
We as a coalition have a raft of amendments for this bill, all of which will improve it significantly. The most significant to our mind is to refer the NBN to the Productivity Commission, and I understand an amendment that will be moved in the committee stage has been or is about to be circulated.
The case for the referral of the NBN to the Productivity Commission has been comprehensively made out, not by us in the coalition, not by the commentators and not by the industry players but by the minister himself through his incapacity to answer any question on the NBN over recent weeks. Indeed, the government itself has clearly lost confidence in the NBN business plan and the minister, and that is why it is now obtaining an independent assessment of the business plan.
Need I remind you that that business plan was prepared by the over 30 or 40—I forget the number now—executives engaged by the NBN Co., all of whom taxpayers are currently funding and who earn between $300,000 and $1.8 million per annum. Those are huge sums of money. These people were charged with developing the business plan which is now being subjected to review by another group of people for sums as yet undisclosed, I think. This cost is once again to be borne by the Australian taxpayer, and the Australian people will not be given that report either.
So, no matter which way we look at the NBN—up, down, in or out—it is a mess; hence, our reluctance to take the minister at face value in relation to his assurances about the NBN. Why should we take his assurances at face value—or at all—when he does not even know what is in his own legislation? The latest news is that the Prime Minister has inserted herself into the discussions with the crossbenchers. I think on balance I welcome that.
In her ministerial capacity, Ms Gillard was responsible for the Building the Education Revolution program, which we now know—courtesy of the leaked caucus minute in which Mr Rudd absolutely nailed Ms Gillard—was one of the great failures of the Rudd Labor government. She was responsible for the announcement at the last election of the cash-for-clunkers scheme. Remember that? We are running away from that one now. Remember the citizens’ assembly on climate change, her initiative? We are running away from that one now. We have a Prime Minister who has a whole host of failures in her previous portfolios and who is the architect of policy failures. With that great CV behind her, she has now inserted herself into this debate to try to assist this hapless minister. I have to say the prime ministerial insertion is to be welcomed, but only marginally.
We still have the unresolved question of who actually commissioned the Greenhill report. We are told that Senator Conroy and Senator Wong are the joint shareholder ministers, but—
There we go. There is a churlish, immature interjection by the minister, saying, ‘You haven’t asked the right question,’ which confirms that the minister is deliberately obfuscating, not only to this place but to the Australian people, because anybody who knows anything about joint ventures knows that one party of the joint venture can go away and seek independent advice as to whether to the joint venture is good, bad or indifferent for their particular interests, which may not necessarily marry up with the interests of the joint venture itself.
The minister interjects, suggesting that we are too lazy to do our own research. What a hide! What a cheek! At least we creased the back of the bill. At least we creased the back of the explanatory memorandum. At least we know that the NBN is referred to in the bill 62 times.
Senator Lundy quite rightly says that we on this side are geniuses, but if the capacity to read a bill makes you a genius what does it make the minister who has responsibility and carriage of this bill when he goes on national TV and says, ‘The bill does not refer to the NBN,’ when there are 62 separate references to the NBN in the bill? That is why we as a coalition have no faith in this minister. That is why we as a coalition have no faith in the rollout of the NBN as proposed by this minister and by this government. That is why we have no faith in the $43,000 million liability that is about to be foisted on the Australian people and to be administered by this incompetent minister. If this minister knew what was actually in his legislation and the explanatory memorandum, we might have some more faith in him and the government and the proposal. At this stage, we do not.
Special thanks—for their contribution to the debate on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, which is so important to Australia’s current and future economic prosperity.
You have been opposing this bill since 12 months before you knew a business plan existed. Do not come in here and pretend you are remotely interested. You have been blocking this bill for 12 months, and now you have found a new excuse in your mind. Those opposite have been opposed to this bill for 12 months. You did not know a business plan existed the first time you opposed it.
Do not come in here and pretend that your position on this bill has anything to do with the business plan. You have been opposing it for 12 months. You only knew about the business plan two months ago. It is just the latest excuse.
Madam Acting Deputy President, I accept your admonishment. The measures put forward in this bill have been the subject of considerable discussion—for over 12 months, in fact. Many of the constructive comments received have led to changes being made to the current legislation to address concerns raised. The competition and consumer safeguards bill is a fundamental and historic micro-economic reform and is in Australia’s long-term national interests. The reforms are designed to reshape regulation in the telecommunications sector in the interests of consumers, business and the economy more broadly. Specifically, the proposed reforms: establish a framework for Telstra to progress its decision to structurally separate, including providing it with greater clarity around the undertaking of the process, which will allow Telstra to seek approval from its shareholders on a firm proposal to migrate its fixed line customers to the NBN; streamline the competition regime to provide more certain and quicker outcomes for telecommunications companies; and strengthen consumer safeguards to ensure service standards are maintained at a high level. Importantly, these reforms are supported by the overwhelming majority of the industry.
Implementing these reforms will address longstanding problems with the existing regime, which is failing consumers and businesses across the country and leading to less choice, poor customer service, lower quality services and higher prices for telecommunications services. Accordingly, passage of these reforms is a key priority for this government. Opposition senators have spent much time rallying around the NBN, pursuing their leader’s instructions to try to demolish the National Broadband Network. They fail to acknowledge that this bill is stand-alone legislation almost entirely relating to Telstra and does not go in any way to the role of the National Broadband Network Co. and its commercial structure. Nothing in this bill is relevant other than a deal between NBN Co. and Telstra. That is what this bill is about. Senator Abetz made great play of the fact that he had ‘creased the back’ of it; he should try understanding it rather than flicking the pages. A cost-benefit analysis has nothing to do with this bill. This bill is about reforming the existing regulatory regime, a regime that the entire industry accepts is broken. The matters that relate to the National Broadband Network in this bill are designed to give industry the legislative certainty to make a smooth transition to the NBN environment. They relate to Telstra’s structural separation.
The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 provides a framework for arrangements for the migration of customer services from Telstra’s network to the National Broadband Network, which is the means by which structural separation of Telstra will be achieved. Let me repeat that for those opposite: the CCS bill provides a framework for arrangements for the migration of customer services from Telstra’s network to the National Broadband Network. Accordingly, there are references to the NBN Co. in the context of migration arrangements and the authorisation of the agreements for the purposes of the trade practices law. There are also references to the agreement reached with Telstra for NBN Co. to access Telstra’s facilities, but the bill is not about the operations, the structure or the ongoing processes of the National Broadband Network. It is not about the business case.
Structural reform of the industry will be implemented with the transition to the NBN in line with the government’s vision for a wholesale-only open-access network. Incentives will be created for Telstra and other telecommunications operators to transform the way they do business to become more innovative and customer focused. This bill creates a framework to deliver this important reform, but the bill also does much more than this.
During the National Broadband Network rollout, the existing telecommunications regulatory regime will remain important for delivering better and more affordable services in the interests of Australian consumers and businesses. The bill is designed to reshape that regime. The vast majority of industry submissions received by my department claimed that the regulatory framework is ineffective due to the ability of parties to engage in regulatory gaming—that is, litigious obstruction—aimed at delaying regulatory outcome. That is what has bedevilled this sector. For example, by mid-October 2010, 164 telecommunications access disputes had been notified since the commencement of the regime in 1997. Your regime is in place today, and it has led to 164 disputes. How does that compare to all the other utility sectors? Only four access disputes have been notified in other regulated sectors, so what is going on in the telco sector? Have there been 164 disputes for any of the other regulated utility sectors? Under the proposed changes to part XIC, the ACCC will set price and non-price terms of access for declared services and access determination to apply to all parties.
The bill will also remove the right to seek merits review of the ACCC’s regulatory decisions. This approach is being pursued to stop every regulatory and legal avenue available being used to frustrate regulatory outcomes and cause uncertainty to the industry. The bill’s providing the ACCC with the power to issue binding rules of conduct will allow the ACCC to take action immediately to address problems relating to the supply of declared services.
The overarching objective of the reforms to part XIC is to streamline regulatory processes and provide the industry with a greater degree of certainty in relation to regulatory outcomes. The certainty will encourage infrastructure investment. The reforms to part XIB will mean that the ACCC will no longer be required to consult with a party before issuing a competition notice. This is aimed at ensuring the ACCC can act swiftly when it believes anticompetitive conduct is occurring in the telecommunications market. The scope of part XIB will also be clarified to ensure that anticompetitive provisions apply to content services supplied by carriers or carriage service providers. This will prevent a dominant provider from using its power in one market to damage a competitor in another. These changes to the telecommunications access regime will underpin greater investments by giving all parties regulatory certainty.
The bill will also protect consumers by providing additional consumer safeguards in relation to specific telecommunications services and practices. In particular, the legislation provides: more stringent rules on Telstra’s supply of basic telephone service at specified standards, including connection and repair periods and reliability requirements; changes to address the decline of telephone companies’ compliance with the customer service guarantee, including introduction of new minimum performance benchmarks; and the ability of the minister to direct the Australian Communications and Media Authority to develop an industry standard where industry codes do not adequately deal with consumer issues.
Senator Birmingham has circulated opposition amendments to the legislation. Firstly, the opposition want to remove the provisions designed to exempt any agreement between Telstra and NBN Co. from the provisions of the Competition and Consumer Act on the grounds that such an agreement might allow anticompetitive outcomes. The opposition are quite deliberately failing to acknowledge the structural reforms to be delivered in the national interest. They also repeatedly make the claim that the agreement between Telstra and NBN Co. will not be subject to ACCC scrutiny, but that is absolutely false.
The CCS bill already includes provision in proposed section 577A for the ACCC to scrutinise and approve the competitive impacts of the agreement between Telstra and NBN Co. This agreement would need to be incorporated into the structural separation undertaking that Telstra lodges with the ACCC. To continue to claim, as Mr Turnbull does, as Senator Birmingham does and as almost all of those opposite do, that the ACCC has been removed from this bill is a falsehood and cannot be allowed to go unchallenged in this chamber. The bill authorises entering into the agreement and associated conduct for the purposes of trade practices law only if the ACCC accepts the undertaking. This removes any need for multiple authorisation inquiries while still ensuring appropriate scrutiny of the arrangements. The bill relies on the authorisation provisions in section 51 of the Competition and Consumer Act, and this is a well-established mechanism which has been used extensively by Australian governments. The ACCC website currently lists 80 separate pieces of Commonwealth, state and territory legislation where section 51 authorisations are in use.
Secondly, the opposition propose that certain ministerial instruments be subject to disallowance by parliament. The government’s strong view is that these instruments should not be disallowable because of the risk that disallowance would cause uncertainty for Telstra shareholders in their consideration of the Telstra-NBN Co. deal. The bill requires that certain instruments be in place to permit Telstra to lodge its SSU with the ACCC. Disallowance would threaten this outcome and could have the perverse effect of forcing Telstra to undertake functional separation even when its preferred option is structural separation.
Thirdly, the opposition call for the removal of the so-called ‘guns to Telstra’s head’ that deny it wireless spectrum and force it to divest itself of its interests in Foxtel unless it voluntarily agrees to separate. The so-called ‘guns to Telstra’s head’ have been removed. There is no longer an automatic prohibition on the acquisition of spectrum if Telstra does not structurally separate and divest itself of its interests in its cable network and Foxtel. The bill has been amended to give Telstra sufficient regulatory certainty to take to its shareholders a firm proposal to structurally separate by allowing Telstra to acquire specified bands of spectrum unless the minister determines otherwise in a legislative instrument. The bill does not require Telstra to divest itself of its interests in Foxtel but still provides a framework for Telstra to voluntarily divest itself of its interests in Foxtel and its hybrid fibre-coaxial cable network. In the event that Telstra did not proceed with structural separation, the minister could take into account Telstra’s ownership of Foxtel and its cable network in determining whether to use the powers in the bill to prevent Telstra from acquiring certain spectrum and in addressing Telstra’s powers in telecommunications markets.
Fourthly, the opposition want to subject ACCC decisions to merits review. This is despite the fact that in 2002, when they were in government, they repealed merits review for ACCC arbitration determinations because it was hindering the development of competition. It is the government’s view that the notional accountability benefits of merits review within the current system are strongly outweighed by the delays, regulatory uncertainty and outright gaming that have occurred.
Furthermore, it is an inappropriate provision. Under paragraph 4.53 of the Administrative Review Council guidelines about what kinds of administrative decisions are suitable for merits review, decisions which involve extensive public inquiries or consultations are not suitable for merits review. The ACCC access determinations, which involve extensive public consultations, fall into this category. Omitting merits review from the proposed arrangements reflects the majority of industry submissions on how best to improve the telecommunications access regime. This aspect was almost universally welcomed by non-Telstra industry participants when the original bill was introduced last year. If the ACCC makes an error of law or process when it makes an access determination, any party affected by the decision will be able to apply to the Federal Court for judicial review of the decision, just as they can now.
Finally, the opposition want to restore the requirement for procedural fairness. The requirement for the ACCC to accord procedural fairness will apply to all of the ACCC’s regulatory decisions under part XIC, except in relation to interim access determinations and binding rules of conduct. The salient point of introducing binding rules of conduct is to allow swift regulatory responses to urgent matters that may arise. According procedural fairness would inevitably delay such actions—hardly a desirable outcome in matters where speed is of the essence. In reality, procedural fairness will not be absent for long in this circumstance. Within 30 days of making a binding rule of conduct, the ACCC will have to commence a public inquiry to vary the access determination to make a new access determination. Parties will be accorded procedural fairness in the public inquiry process. The opposition amendments are unnecessary and would serve only to complicate the proposed streamlining of the regulatory framework. I welcome Senator Ludlam’s indication of support for early passage of the bill.
The telecommunications industry states that it needs these reforms. The Chief Executive Officer of Telstra, David Thodey, has indicated his support for this bill:
On balance, we support the passage of the bill. We believe the interests of Telstra shareholders would be best served by the bill being passed this year so that a definitive agreement on our involvement in the NBN can be reached quickly.
In an example of unprecedented unity, seven telecommunications companies, the Australian Telecommunications Users Group and the Australian Communications Consumer Action Network—the peak body representing consumers—said in a joint letter to all senators on 18 February this year:
Australian consumers deserve and need these reforms, none more so than those in regional Australia.
The Australian telecommunications industry has been bedevilled by a failed market structure and poor competition, resulting in prices that are high by international standards. The bill represents a comprehensive and coherent set of measures to improve competition and consumer protections, and the failure of this legislation will be detrimental to the needs of all Australians.
So there it is—the choice is clear. You can have a bunch of wreckers who want to destroy the NBN because they believe it is their path to destroying the government—
Opposition senators interjecting—
You have been opposing this bill for 12 months, before you knew the business plan existed. (Time expired)
That this bill be now read a second time.
Bill read a second time.