TELECOMMUNICATIONS LEGISLATION AMENDMENT (COMPETITION AND CONSUMER SAFEGUARDS) BILL 2010

SENATOR BIRMINGHAM: (South Australia) (12:31 PM) -It is a pleasure to rise and to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010. During the course of this debate in the Senate I have no doubt we will hear various interpretations from those opposite about what is actually in this bill and what the purpose of this legislative package is. Let us be under no illusions: this bill does, indeed, deal with matters that relate to the separation of Telstra; it does deal with matters that relate to various competition and consumer measures-some may say various anticompetitive measures; but at its heart this bill is interrelated with the government’s policy to build the National Broadband Network. There can be no disputing the fact that woven throughout this legislative package is the government’s $43 billion fibre-to-the-home NBN proposal.

We know that it is woven throughout this package because, indeed, you need only look at the bill or the explanatory memorandum to see just how clearly woven it is throughout the package. Through the legislation ‘NBN’ is mentioned some 62 times and ‘National Broadband Network’ on three occasions, for a total of 65 occasions. Through the EM, ‘NBN’ or ‘National Broadband Network’ is mentioned on some 204 occasions. All up there are 269 occasions in either the legislation or the explanatory memorandum where we have the NBN sitting at the heart and soul of this legislative package. So we should not be fooled by those opposite who will try to tell us during this debate that it is all about simply the separation of Telstra and the competition benefits that may or may not flow from that.

I want to deal firstly with issues around the NBN before I touch more particularly on some of the matters relevant to the bill. I have said before in this place that the commitment to fast, affordable and universal broadband access is nowadays a bit like motherhood in this place: everyone agrees to it, everyone supports it, everyone expects that that should be the policy outcome. It is the journey and the means to get there that matters most, and this is where the coalition and the government part company.

We believe the achievement of this goal is best achieved through a competitive telecommunications sector: a sector that encourages innovation; a sector that encourages sound competition; a sector that is driven by private investment, as it has always been; but, importantly, a sector where government has a role to play in filling the gaps where there is a market failure-where that ultimate policy goal of universal, affordable broadband access cannot be achieved. These we think are appropriate ways to go about achieving a sound policy objective.

However, the government seems to believe that it is far better to dismantle all that we have, to deconstruct the competitive and competition policy arrangements and frameworks we have in this country, and instead to build a new $43 billion government owned monopoly enterprise. It plans to do so by overbuilding and dismantling the entire existing framework-the copper network that currently exists as well as cable networks that exist around Australia. This will assist in creating its fixed line monopoly, yes, but it will see the destruction or the waste of much infrastructure that is already rolled out around Australia. It will see in places around Australia that already enjoy access to high-speed broadband the overlaying of a new fibre cable to deliver high-speed broadband. If this duplication of infrastructure is not waste then I am at a loss to see what could possibly be a wasteful outcome.

Of course this legislative package in many ways is all about entrenching the monopoly position that the government hopes its NBN Co. will enjoy, because this legislation does not just set out terms on which Telstra should be structurally separated; it goes further and in going further it actually puts in place and reinforces contractual arrangements that will prevent Telstra from using its HFC network to offer competitive voice and data services with the NBN. Let us be clear: the HFC network is not going to be decommissioned. It will still be providing pay-TV services and it will still be connected door-to-door to thousands of Australian homes, but it will be prevented from actually providing an alternative, competitive broadband service.

We recognise that Telstra shareholders-at least, the Telstra board-have indicated support for parts of this legislative package. After all, they are getting an $11-billion after-tax windfall as a result of the deal that has been struck between the government and Telstra, and good luck to Telstra shareholders in that regard. But I think we would be having a markedly different debate if this were not so integrated with the NBN proposal. It would be markedly different because we would actually be having a debate about how best to separate Telstra and doing so at the lowest cost for taxpayers whilst ensuring maximum value for Telstra shareholders. We would be debating how we would ensure ongoing competitiveness in the provision of broadband in Australia. Instead, we are going to have a debate that is focused on the government monopoly that they are proposing to build, because that is at the heart and centre of so many of the conditions that sit within this legislation.

I recall, in one of the many Senate hearings into the NBN proposal, asking David Forman of the Competitive Carriers Coalition what was more important: this legislation or building the NBN? Whilst Mr Forman said that he did not think it had to be a choice, he indicated that, ultimately, getting a separation of Telstra was far more important to competition in Australia than building the NBN was. I think it is important that we should have been having in this place a fair-dinkum debate-separate from the NBN debate-about how best to separate Telstra and how best to achieve those competitive outcomes. Sadly, the government’s approach has been to integrate the NBN throughout this. Many anti-competitive measures have been buried in this legislation to assist the NBN. That can only harm the quality of the debate we can have in this regard.

The government seems to be saying nowadays that anything less than a fibre-to-the-home package at 100 megabits per second is inadequate. Yet, in doing so, it is offering no evidence or rationale as to why that is inadequate-why Australia will suddenly reap enormous windfall benefits from such a huge transformation of speeds in the broadband space. We on this side have challenged the government to undertake a thorough cost-benefit analysis, a Productivity Commission assessment. Yet, sadly, the government has rejected those challenges from the opposition. If the government is so confident in its beliefs that the NBN is going to provide massive benefits for Australia, then why not undertake the Productivity Commission cost-benefit analysis that is being called for? Why shirk this type of scrutiny? Such scrutiny could tell Australian taxpayers once and for all whether putting $43 billion into fibre-to-the-home is a good investment and whether the idea of government picking the technology for the delivery of future broadband services is a good idea and, indeed, whether the technology picked is the right one. Such scrutiny could tell us whether, as we on this side believe, you would be far better off ensuring-for the vast areas of Australia where a competitive telecommunications market already exists and could be further enhanced by some of the measures in this legislation-competition and letting the private sector and private industry get on with the job of choosing the technologies for themselves. Such scrutiny could tell us whether, essentially, government should be technologically agnostic in the policy parameters it sets rather than trying to pick winners. Higher speeds of course sound attractive, but we are talking about investing a vast sum of public money and it is critical that the government justify the investment of that vast sum. The disappointment to date has been that the government has not been willing to do so.

We have seen the government fly in the face of its own guidelines, such as those released by Infrastructure Australia in October 2009 for better infrastructure decision-making. They stated that all initiatives proposed to Infrastructure Australia should include ‘a thorough and detailed economic cost-benefit analysis.’ The guidelines went on to state:

Those guidelines were released by an agency established by this government to look at how infrastructure should be built. Yet, for the largest infrastructure proposal of its kind, the government is tossing out its own guidelines.

Last week, the OECD handed down a report calling for a more robust approach and greater transparency in the way the NBN was developed-essentially, urging the government to hasten slowly in the progress surrounding its NBN. Yet the government still charges ahead, and refuses to undertake such a cost-benefit analysis. I hope that, during the course of this debate, we will see the government relent on this and acknowledge that there is benefit in doing so. The opposition is not, contrary to what those opposite say, seeking to hold the project up while this cost-benefit analysis is undertaken. We expect and accept that the government will continue with its deals and its build, but we believe that Australians would be better off if, by early next year or the middle of next year, after a thorough analysis, we were informed as to whether this was on the right track or not. Then Australia could make appropriate considerations about the government’s expenditure of so many billions of dollars.

A key concern of ours in relation to this legislation is that it is occurring under duress for Telstra. The government is essentially holding a gun at the head of one of Australia’s largest publicly listed companies in order to ensure that it gets its way and its NBN Co. is protected into the future. We do not think that such a deal is appropriate, especially not when it is aimed at trying to create a whole new government monopoly. As I have said before, any restructuring should be on terms that are fair to Telstra shareholders and to taxpayers-and on both those counts, it seems, this deal fails. Telstra shareholders are expected to operate under the duress of a threat that they will be denied access to future investment opportunities in the telecommunications market if they do not deal with the government, and taxpayers are denied the opportunity to see and know whether this is a wise policy and a wise investment of taxpayer funds.

The opposition have stated that we believe a separation could occur, on terms that are attractive to Telstra shareholders, if a resulting network company were given regulatory certainty and the knowledge that as a regulated utility it would be able to charge prices that deliver a reasonable rate of return on its assets. We think this type of separation could achieve a better outcome for the broadband sector in Australia, for Telstra shareholders and, importantly, for Australia’s taxpayers.

As well as driving the separation of Telstra, there are some key objectives in this legislation. In the competition space, the bill seeks to exempt the proposed Telstra-NBN Co. agreement and possible NBN Co. deals with carriers such as Optus from the normal operation of the Competition and Consumer Act. We see this deal as anti-competitive because it envisages Telstra being contractually required to decommission its copper network-an asset that still has value, even if that value is lessening-even as the NBN is rolled out. Once again we have a situation where the government is seeking to eliminate all competition or alternatives. As I have stated before, Telstra and, presumably, Optus will be prohibited from offering broadband and voice services over their HFC pay-TV cable networks. This infrastructure passes 30 per cent of Australian homes already and could be tuned up to deliver over 100 megabits today, yet it will be expected to lie dormant in the broadband space. The HFC network will not be decommissioned; it will continue to provide pay-TV services only. This is an approach that is without precedent anywhere in the world. The government is trying to eliminate all other forms of potential fixed line to the household competition in Australia in order to establish its significant new monopoly.

The third key area that the bill seeks to address is in relation to the access regime. The existing regime is widely seen to be only partly effective, since Telstra has frequently been able to negotiate and arbitrate a framework to delay and frustrate access seekers. We acknowledge that and, indeed, there is space to improve that. The bill seeks to amend the access regime included in the Competition and Consumer Act away from these traits and, instead, to a new model where the ACCC sets upfront price and non-price terms for declared services for periods of three to five years. This shift to a set and forget model would provide increased certainty for access seekers and carriers. But, in providing more certainty for Telstra’s competitors, we need to be careful not to tip the balance too far and unfairly limit the company’s scope to appeal if the ACCC gets it wrong. Therefore, in this space as well as in the others that I have mentioned, we will have some amendments to try to restore merit review processes and reinstate the ACCC’s procedural fairness obligations when it issues competition notices.

Finally the bill reinforces existing consumer protection safeguards, including the USO and the customer service guarantee. While these changes place an increased burden on carriers, the coalition does support them and will not be moving amendments in this area. In particular, we believe it is critical that consumer protections be meticulously upheld in rural and regional areas, which is where we believe the No. 1 focus of broadband policy in this country should be.

The coalition will be seeking to move a series of amendments during the debate on this legislation. Most of these have been covered and countenanced in the House of Representatives already and we look forward to considering the amendments of those from the crossbench too. I do note that there is some media coverage today speculating that amendments have been struck, or agreed to, between the Greens and the government. I note that, irony of all ironies, those amendments suggest that the government is willing to accept a Productivity Commission assessment of the NBN-once it has finished spending the $43 billion on building it-to determine whether it should be privatised. This is the ultimate case of the government putting the cart before the horse. The government has an opportunity here and now to have a Productivity Commission analysis; it can do it today, it can get it underway right now, and it can do it without waiting until the end of the cycle. The fact that the government has agreed, in a dodgy deal with the Greens, to have it put in at the end of this process rather than upfront is an outrage and it is something the government needs to look long and hard at because all Australians will see the folly of assessing the state of the market and the expenditure of some $43 billion after it has happened rather than before.

The coalition’s amendments seek to achieve a fair outcome for Telstra shareholders and Australian taxpayers, to remove the gun at the head of Telstra shareholders and to ensure that taxpayers get a fair deal. I would hope that Senator Xenophon, Senator Fielding and the Greens will be amenable to considering these agreements and, importantly, I hope that, at the end of this debate, the government acknowledges that a Productivity Commission analysis today is the right thing to do.