SENATOR BIRMINGHAM: (South Australia) (09:45): I rise to speak on the Telecommunications Universal Service Management Agency Bill 2011 and related bills. But, with the indulgence of the Senate, I will just touch on a couple of other matters initially. Firstly, because I may not have a chance on the record at any other time today to say this, I note that today, being the last day of February, is the culmination of Ovarian Cancer Awareness Month. Knowing that Senator Conroy’s office would be monitoring this, as this is his legislation, I note the participation of Senator Conroy and in particular his wife, Paula, in the ovarian cancer breakfast held in Parliament House this morning, and I note in this place, appropriately, the memories that many have of my predecessor in this Senate seat and your predecessor, Mr Deputy President, as Liberal Party whip, Senator Jeannie Ferris, who did so much to raise awareness of ovarian cancer during her battle, which she ultimately succumbed to, with ovarian cancer.

This legislation has come on a little earlier than anticipated because of the filibustering tactics the Greens are employing on the radioactive waste legislation-a shameful tactic from the Greens, who do not seem to recognise the importance to Australia of ensuring that we have a central repository for radioactive waste in this country. I note that having brought this debate on, though, this has moved out into an area of legislation where there is some broad agreement of principle and some concern over detail.

The universal service obligation is an important tenet and feature of Australia’s telecommunications policy. It requires that basic telecommunications services, including home telephone services, business telephone services and payphones, be accessible to all Australians in a fair and equitable basis at an affordable price. The universal service obligation is especially important for telecommunications consumers in rural and regional Australia, as it ensures that basic telco services are available where it may not otherwise be economically viable for telecommunications companies to provide them. Without this subsidy, the tyranny of distance would be all the greater for many rural Australians who may not be able to afford basic services. For this reason, the coalition strongly support the USO. We have always done so, and we continue to do so. It is consistent with our overall support for communications services of the highest standard and order in rural and regional Australia.

Our support has not just been for the USO. If we look at what we had in place at the end of the Howard government, we see that we had in place a number of measures that were designed to provide a better standard and to continually raise the standard and the bar of telco services for rural and regional Australians. I think immediately of the regional telecommunications fund-$2 billion that had been set aside to be able to provide a constant source of funding to upgrade services to rural and regional Australians. Sadly, that fund is no more because, like all available piggy banks under this government, it has been raided and spent. It was spent in this case on the National Broadband Network, which thus far is not exactly rolling out vast new services in rural and regional Australia at a rapid pace.

Indeed, if we compare the NBN and where it is up to in its provision of, especially, wireless services to regional communities with what the coalition had in place at the end of the Howard government, we will see that we were on track to deliver wireless services to regional communities within a few years. They would have already had services under the OPEL contract that would have provided for better regional telecommunications services today than they currently have. That would have been delivered under a contract signed by the previous government and funded by the previous government and that would already have been operational today. Instead, we continue to hear promises but see delays from the government as it rolls out the NBN. We hear promises but there are delays and therefore consumers in rural and regional Australia are still waiting to see the genuine benefits of this claimed NBN.

Telstra currently delivers the universal service obligation. Being a former monopoly provider and the owner of much of Australia’s fixed line telecommunications infrastructure, Telstra’s role in this is understandable. Current regulation requires Telstra to provide basic services at an equitable rate. To compensate Telstra for this obligation, all telco carriers are levied, with the majority of funds raised provided to Telstra to offset the cost of their undertakings in this area. Presently the levy raised is approximately $145 million. This legislation also affects the provision of the Emergency Call Service and the National Relay Service. The National Relay Service delivers voice-equivalent services to Australians with speech or hearing impairments through voice-to-text and text-to-voice technologies. The NRS, I understand, costs around $17 million under its current contract provider.

Telstra has argued for some time that the fees levied from service providers which it receives to compensate it for the cost it incurs in relation to the provision of the USO are insufficient. Unsurprisingly, Telstra’s retail competitors, who are levy payers, have opposed any increase to the levy. This legislation provides ultimately a convenient escape from this argument between companies. The government commissioned the Castalia report, an independent expert report, to consider this matter. It found that the cost of providing the USO combined with the cost of the NRS and provision of public payphones amounted to at least $250 million and up to $300 million annually. While this will in theory end the argument between Telstra and other retail service providers, it opens up a new potential front for argument between retail telco service providers and the government and in particular the new Telecommunications Universal Service Management Agency, TUSMA. We have seen that already with many of the other retail service providers in the telco space questioning the validity of the Castalia report and the costs and doubting whether the sums involved are indeed appropriate. While the current USO was appropriate while Telstra was the owner and operator of Australia’s fixed line telecommunications network, with the changed environment foreshadowed by the government through their NBN and of course the planned ripping out of the copper network right around Australia-if, indeed, this ever does occur given the appallingly slow or extravagantly expensive rollout of the NBN to date-it makes sense to plan to alter the arrangements of the USO to fit with the government’s overall policy direction. This bill is before us largely because Labor is seeking to create the NBN-a massive government owned communications infrastructure monopoly that will stifle competition and innovation in Australia’s telecommunications sector, but that should not be any surprise to anybody given that private ownership, efficiency, competition and business innovation are anathema to what this government stands for. Nonetheless, as the government intends to limit facilities based competition by ripping copper line from the ground and implementing its new regulatory regime with a monopoly fibre provider, we must address the provision of the important services contained in the USO.

On the coalition side we expect transparency and competition in government tenders for services. The question here is whether the processes set out through this legislation and already undertaken by the government as part of the new TUSMA arrangement actually meet with those expectations of the coalition. This process sees the costs of services revealed and openly and transparently funded by both taxpayers and the retail service providers-not to mention it removes a somewhat onerous regulatory requirement from a private business: Telstra. This is all something that our party welcomes. If only the NBN as a whole was as transparent and up-front about the costs, subsidies and competitive impacts of this unprecedented government intervention.

While I welcome the increased transparency of the amount involved and the replacement of the USO and NRS levies with a single levy and the funding arrangements for it, there is of course, as always with Labor, a catch. As we have seen so openly this week, there is always more than meets the eye. Whenever Labor seeks to simplify, the outcome is always more complex. Whenever Labor seeks to cut costs, the outcome is always more expensive. Whenever Labor seeks to reduce regulation, the outcome is always a new bureaucracy. Labor talks of efficient government and transparent government, but it is of course addicted to bloated, big, inefficient government.

These bills sadly provide for more of the same in some ways. These bills create yet another new bureaucracy. We all know Labor has never seen a bureaucracy that it did not like. This time it is the Telecommunications Universal Service Management Agency, or TUSMA-a mouthful if you do not take the acronym. TUSMA will be created to do what the Australian Communications and Media Authority already does in part-that is, assume responsibility for the USO. I am not sure why the minister lacked confidence in the ACMA to administer all of the operation of the USO, and perhaps he can explain this for us when he sums up. Indeed, perhaps he needs some extra positions to appoint some of his Labor mates to. Maybe we will even see Senator Arbib bobbing up and helping with the USO in his next life. As I understand it, the ACMA will of course continue to collect the industry levy, which will fund the USO. I understand that ACMA has staff of around 40 engaged in the responsibility for the USO and associated aspects. TUSMA will oversee the new regime and it will come at an administrative cost of around $5 million.

I mentioned earlier that the coalition, by our very nature, expect open and transparent tenders for government services, so it is therefore disappointing that, far from taking the opportunity to put the USO and NRS services out to a competitive, open tender, the government have entered into a 20-year contract with Telstra. We all know that Telstra’s cooperation and acquiescence to the NBN model is essential for the success of the NBN model. Obviously in this case we see that, even with the USO contract, it does appear to have the image, as suggested by many, of being wrapped up as a potential little sweetener valued at around $2.7 billion over 10 years for Telstra.

One of the TUSMA jobs is to enter into contracts for the delivery of the USO. That begs the question that, if one of their core jobs is to enter into contracts for delivery of the USO but the government has already agreed to the first 20 years worth of contracts, perhaps the new bureaucratic agency is going to have a rather quiet first 20 years. Indeed, the Department of Broadband, Communications and the Digital Economy said as much during the inquiry into these bills. Departmental deputy secretary Mr Quinlivan stated:

These measures were agreed to support the government’s broader package of telecommunications reforms, implementation of the NBN and, most importantly in this context, the structural separation of Telstra.

We see an admission there from the department that this is not a pure approach about simply the provision of universal services to rural and regional Australians; this of course is all embedded in the government’s approach to the implementation of the NBN and the structural of separation of Telstra. Yesterday, the ACCC approved a much revised structural separation undertaking between the government and Telstra-a structural separation undertaking that at least now does not include some of the remarkable provisions that NBN Co. and the government had sought to impose upon Telstra in the first place. Those conditions would have seen them limited to the manner in which they conducted competition for their non-fixed line businesses and non-fibre businesses and would have seen them not able to effectively promote their wireless services against NBN Co.’s monopoly services, because so scared is the government of any semblance of competition against its NBN model. I do not begrudge Telstra receiving this contract. It probably is at the current point in time the best placed of Australia’s service providers to deliver it, given, of course, that it continues to be with the copper line being the product provided to the overwhelming majority of Australian premises. It is the owner of that service and the one best placed to ensure its maintenance and continuance into the future. We have the strange situation under the NBN model and under this proposal that the copper line is going to have to be maintained in certain parts of Australia for an indefinite period of time. Whilst the government proposes to rip up, switch off and disconnect the copper line services for 93 per cent of Australian premises-if, of course, it ever gets that far with its NBN-there is a question mark that remains for the remainder and an uncertainty as to how the services under the USO are going to be provided to those remaining households into the future in a cost-effective manner for all involved. The problem that we have, however, with the Telstra contract, with the report that was undertaken and with the approach going forward is that we will never know for sure if due process really was followed. Certainly we know that there was no real open tender conducted at this stage of events.

Senator Conroy, as the responsible minister, has quite an interesting history when it comes to tenders. I reflect on NBN stage 1 and the tender that was undertaken at that stage to provide the fibre-to-the-node broadband service. Fibre to the node was what the Labor government was originally elected promising. This was, if my memory is correct, a $4.7 billion promise.

Senator Ludwig: Did you buy the copper?

Senator BIRMINGHAM: Senator Ludwig wants to ask if we have bought the copper. As I just reflected, Senator Ludwig, large parts of Australia-including large parts of rural and regional Australia, critical to your portfolio-are in theory going to continue to be reliant on copper services under this proposal for an indefinite period of time into the future. But Senator Conroy went through that $4.7-ish billion contract for NBN stage 1, for fibre-to-the-node services, only, having spent millions of dollars on that tender, to have to abandon and scrap it, having wasted countless hours of government and private sector time, and to come up with a new model that just shifted the decimal place across by one so that we ended up with something closer to a $50 billion proposal. Clearly it was not a big deal to the government, because equally, as we all know, it was all dreamt up on the back of a serviette, or both sides of a serviette, or both sides of an envelope or a drinks coaster, on that famous VIP flight between Melbourne and Brisbane.

Senator Conroy, of course, continued his interesting history with tender processes in the recent Australia Network contract debacle that the government engaged in, which once again saw millions of dollars and countless hours of government and private sector time wasted on a botched tender process that is now the subject of dual investigations by the Australian Federal Police and the Auditor-General’s office. But I digress. Senator Conroy has so many problems and debacles that I could not possibly cover them all now, so I shall return to the issue of TUSMA.

The coalition is concerned that telecommunications service providers, and ultimately consumers and taxpayers, will end up potentially paying more as a result of TUSMA and the arrangements in place. TUSMA’s running costs will be paid and borne in part by taxpayers, at least over the immediate future, and of course by the telecommunications industry through the levy structure, with the government initially providing a flat $100 million contribution to provide the gap between existing levy arrangements and the expected funding necessary for the new USO arrangements. Of course, the industry levy structure in the future has the risk and the fear that there is a lack of incentive to rein in costs, and that has created fears that many retail service providers expressed to the Senate inquiry: they feared that the hit to industry and the costs to consumers will continue to grow and grow. Perhaps, if the government had conducted proper consultations on this matter, the reform would not have caused the concern in the telco sector that we heard about through the Senate inquiry. There was genuine concern about the consultation process and the government’s admissions, effectively, that this was all wrapped up before the final legislation was developed. So we come to this process wanting to support the USO and accepting that a new model is necessary given the government’s policy direction but with concerns about the bureaucracy and costs which will be expressed later.