CHAIR —Welcome. We have received your submission as No. 9. Do you wish to make any amendments or additions to your submission?

Ms Hurley —No, I do not.

CHAIR —You are reminded that evidence given to the committee is protected by parliamentary privilege and that the giving of false or misleading evidence to the committee may constitute a contempt of the Senate. I now invite you to make an opening statement before we move to questions.

Ms Hurley —As you all know, ACIF was established in 1997 in direct response to the government’s implementation of the policy of the maximum use of industry self-regulation in telecommunications but without imposing undue financial or administrative hardship on industry. Since that time it has developed a large number of outcomes, predominantly in the area of codes and standards. I have brought along today a short summary of the consumer codes that we have developed over the last eight years. That is not the only matter that we have been making codes in respect of. Our other charter is to make codes and standards related to interoperator arrangements to make the competitive processes work. An example of that would be mobile number portability and local number portability, the rules for which were developed through ACIF.

This morning I will highlight the three critical areas which ACIF needs to respond to to ensure that in the current environment and going forward it is actually contemporary and relevant to deal with the issues in the telecommunications industry at the moment. The first one is the merger of the ACA and the ABA, because quite clearly that brings into stark relief the fact that there will be two different approaches to industry self-regulation under the one regulatory body—and, in particular, in the context of what we are inquiring into here, the approach to consumer participation in those self-regulatory frameworks. It is something that we need to be aware of. We need to be sure that we are addressing the issues of how to develop codes as we go forward, taking into account the approaches to industry self-regulation as well as the different types of issues in the converged environment that we will be asked to deal with.

The second area is the emerging technologies in the converged environment, particularly voice over IP. We see that as an opportunity for industry to show how self-regulation can work. There has been a lot of discussion over the last few years about what the appropriate framework is to go forward and whether the framework needs some amendment in order to deal with issues of voice over IP. ACIF has done some work in identifying what the self-regulatory responses are which are required to roll out VOIP as a consumer offering. I have brought along some fact sheets which were released last week telling VOIP providers what they need to tell their costumers about the services; responding specifically to the issues to tell consumers about the quality of the service that they are buying. We see that specifically as another area where self-regulation is going to be tested, but where ACIF can show what the benefits of it are.

The third area is in response to the consumer observations made in the CDC paper. We have taken a very considered approach to how we deal with what is in that paper. I have been on record addressing some of the factual issues in that paper that I thought needed some correction from ACIF’s perspective. We see a need to respond to the comments and recommendations that have been made. Also, more broadly, it is an opportunity for ACIF to listen to what it has been told about how consumers view participation within ACIF—to seriously listen and to take a really broad approach with it. It has not been a positive consumer experience to date. We need to see where the gaps are and what we really need to address as we go forward into the converged environment. They are the issues to which we are responding.

CHAIR —I will start with my questions on the CDC paper. I notice that your submission includes your concerns with, as you say, the factual aspects of the paper. The process for responding to that paper would obviously still involve a consensus decision across your membership. I have been in politics long enough to know that it is often very difficult to get industry players to agree on consumer protection issues. What process is ACIF going through to develop its formal response and what do you think will come out of it?

Ms Hurley —We have moved to set up a subcommittee under the board. We will be pulling together that subcommittee to examine the recommendations and to take them back to the board as to how it should respond. I am expecting it to be a very fulsome response because we see this as an opportunity to get it right and to engage all the necessary stakeholders as to what is the appropriate form for consumer participation in ACIF.

CHAIR —So, essentially, you are saying that your members are quite open to substantial improvements in your consumer participation regime.

Ms Hurley —Absolutely. ACIF has demonstrated from day one that what it really wants is consumer involvement in its outcomes, and that is something that we are committed to. If it is not working optimally from the perspective of those who are trying to involve in the processes and the outcomes, we need to work with them to understand what we can do better.

CHAIR —You note in your opening statement significant differences between the approach under the broadcasting act and the Telecommunications Act in terms of code development. Without going into enormous detail, from a consumer point of view what are the key differences that you are drawing our attention to?

Ms Hurley —Specifically the involvement of the consumer representatives in the code development process. Clearly, we involve consumers very deeply in the code development process. In the broadcasting area that does not happen. Certainly there is consultation but it is not full-on participation. It may well be that is a function of the types of issues dealing with the codes. When you are dealing with content issues, in particular, you are dealing with a much wider range of community and public interest concerns that need to be accommodated.

CHAIR —I do not know if you listened to the evidence of Dr Wilding, particularly in relation to code development, but are there any comments or responses that you want to make to any of that evidence this morning?

Ms Hurley —I thought Dr Wilding’s descriptions of the issues were very balanced. It is very much a balance, in any code development process at ACIF, to ensure that you address the consumer issues but not put undue financial and administrative burdens upon industry. At the end of the day, though, the code development process is a means to an end. What we are really concerned about is what the outcome is. If the process is not working, we need to look at what the process is that can be optimally tweaked to get the outcome, which is what we did with the consumer contracts code. I take on board that it was a long time coming to get to that point, but once the movement had started to develop the code the response was there to ensure that the processes would deliver an outcome in a timely fashion.

CHAIR —Will it deliver on the ability to unilaterally change standard forms of agreement and those sorts of issues? Are they picked up in the consumer contracts code?

Ms Hurley —In the content of the consumer contracts code, yes. What happens from here, of course, is a matter for compliance with the code, as Dr Wilding identified. To assist that, ACIF has held a number of industry briefings in Sydney and Melbourne so that suppliers are fully aware of what their requirements are for compliance under the code.

Senator TIERNEY —In your submission you seem reasonably satisfied with the way things have worked out since the 1997 act in terms of the balance between self-regulation and government regulation by legislation. Is there any area where you feel that perhaps the balance is wrong and needs changing?

Ms Hurley —I would never say I was complacent about how it has developed. ACIF has certainly shown that it can deliver, because it has delivered a large number of consumer protections and codes over the last seven or eight years. At the end of the day, whether self-regulation works is totally dependent upon collaborative working amongst all stakeholders in the regulatory regime. No matter which way you define it, it is only ever going to work if ACIF, the ACA, the ACCC, the department, the government and the consumers all work together to make it work.

Senator TIERNEY —Given the range you cover, what area would you identify as perhaps needing more work than others?

Ms Hurley —From where I came in 12 months ago, the area I would identify would be more flexibility in processes within ACIF. Of course, ACIF is not the only industry body that can develop self-regulatory responses. It is just one example of how it can be done. Dr Wilding quite correctly pointed to some processes which were slow in delivering results, to the extent that I think we need to focus more on outcomes and make sure that the processes are open, transparent and flexible to get those outcomes.

Senator TIERNEY —Can you give me an example of that? What has happened in the last 12 months where you felt it was inflexible and slow?

Ms Hurley —I am talking about the processes.

Senator TIERNEY —Yes, I know.

Ms Hurley —Clearly the consumer contracts code is one you would have to point to that did have deficiencies for the response to actually implement it. We have taken that on board, with the requirement now to deal with the issue of unexpectedly high bills and credit management issues. We are currently revising the credit management code and we are taking the best of the practices from the consumer credit code and refining them even further. We are bringing in professional project management to ensure that there is a six-month time frame and everything is delivered according to milestones along the way, to ensure there is a timely outcome.

Senator TIERNEY —With the creation of the Australian Communications and Media Authority there are two different cultures coming together. Your one is perhaps a little more regulatory than the broadcasting one, which is more self-regulatory. Do you see that in the new regime, in the converging world of technology, we could perhaps get a more even approach to the balance between regulation and deregulation across broadcasting and communications? Or is it a horses for courses thing?

Ms Hurley —That is a very big question. It does not just cover telecommunications and broadcasting. It is not just those cultures that need to be brought together in the converged environment. It is also about merging services over IP protocol. You are talking about bringing into the environment service providers who are not traditionally used to dealing with regulation, so you are dealing with suppliers who probably come more from an IT background and you need to get that culture involved in the framework as well so they understand that there are rules that need to be abided by in the environment. So it is much bigger than just telecommunications and broadcasting.

Senator TIERNEY —There are some existing areas that we have not involved, such as the work of the OFLC on film—which, via the net, can be on television. It can be coming down telecommunications technologies as well. Do you see a need to bring all of that in? They have a system of codes of practice as well, but they are off in a separate silo in A-G’s. Do you think that should be brought in and we should look at the whole thing as technologies converge?

Ms Hurley —We have taken the approach that we certainly need to have relationships with all the organisations that are involved in the framework. We have had the OFLC over to ACIF to talk about what we do, how we interact and what the issues are that we are all dealing with. When I said earlier that these frameworks only work if there is collaboration amongst all the stakeholders, I should probably have included the OFLC in that as well because they are part of the framework going forward.

Senator TIERNEY —But they come under a different set of law and they come under a different bureaucratic structure and decision-making structure. Surely if we leave it that way that is going to create problems over time, and we will not get a best fit in terms of industry development.

Ms Hurley —That is ultimately a matter for the government, not for ACIF. As I see it, it is very important to have the relationship with them.

Senator TIERNEY —I understand that. I just wanted your view on that. You said it is broader than all that and that we need to take into account new players who are coming in via this new technology and who are not used to this sort of thing. The Australian Internet Industry Association has a self-regulatory code which it has developed over the last 10 years. Are you speaking more broadly than that or is it something that could come under its purview in terms of a code of practice?

Ms Hurley —There may well be overlaps. As I said, ACIF is not the only organisation that provides self-regulatory responses. It has certainly taken a leading role under the 1997 act. We look to work collaboratively with all the bodies that have a role to play in it. So far as IP providers are concerned, we are reaching out and making sure that everybody knows what the environment is and that the new providers understand that there is a need to come and talk to the existing players to take it forward.

Senator TIERNEY —Finally, as we move into this rapidly developing new technology, do you think that with our experience over eight years—with the balance we have between regulation and deregulation—in the future we will move more towards a deregulatory approach, or do you think these technologies will change so rapidly that there will be a need for even a light touch by government and perhaps more regulation? In the communications area, where we thought we were going to go to more deregulated approaches, it is perhaps balanced a little bit the other way.

Ms Hurley —It would come back to what your objective is in the whole framework. If you go back to the objective of introducing industry self-regulation in the first place, as I understand it, it was because industry self-regulation in telecommunications was seen as being more flexible in the environment to respond to the emerging technologies and put the appropriate technical responses in place more rapidly than legislation could. To the extent that that is the objective of it, I would presume that that would still stay relevant. I would suggest that perhaps the work that ACIF is doing in the environment for voice over IP would lend some credence to that.

Senator TIERNEY —Could you provide us later with some more information on what you are doing on voice over IP?

Ms Hurley —We would be very happy to.

Senator CONROY —Did I hear mention that you have been with ACIF for 12 months?

Ms Hurley —Yes.

Senator CONROY —In your submission you say you are a strong supporter of the status quo in telecommunications consumer protection. Is it your view that the regime’s current preference for self-regulation is serving consumers well?

Ms Hurley —That is my view. If you look at the outcomes that ACIF has delivered over the last seven to eight years you will see that there are in place a significant number of consumer protections that did not exist before 1997. On that basis you would have to say there have been very positive outcomes for consumers.

Senator CONROY —What steps does ACIF take to monitor compliance with ACIF guidelines and non-registered codes?

Ms Hurley —ACIF has in place now a compliance manager.

Senator CONROY —When did that person start?

Ms Hurley —That person started in December last year. The role of the compliance manager is to assist industry with its compliance initiatives. At the end of the day, whether or not there is compliance with guidelines or codes, whether they are registered or unregistered is a matter for the supplier. ACIF seeks to provide assistance in understanding what the requirements are to comply.

Senator CONROY —So, for the best part of eight years, ACIF has not performed the role of this compliance officer?

Ms Hurley —The functions have been spread across a number of other people. We have brought it into one role to give it absolute visibility that this is what we are serious about.

Senator CONROY —So if a carrier were not complying with a guideline or a non-registered code, what would be the consequence?

Ms Hurley —We have the code administration and compliance scheme, and there would be the ability for others in the industry to complain that that work was not being complied with. It has not happened to date.

Senator CONROY —What is the consequence if they do not comply with a non-registered code or a guideline?

Ms Hurley —There is no entrenched consequence that I am aware of.

Senator CONROY —I think you may have just answered this question. How often has this happened?

Ms Hurley —I am not aware that it has happened at all.

Senator CONROY —There has been no enforcement at all in any situation?

Ms Hurley —ACIF’s role is not one of enforcement. The role of enforcement of registered codes lies with the ACA. ACIF’s role is to drive compliance with its outcomes.

Senator CONROY —Again, how often has the ACA taken enforcement action against a carrier for failing to comply with a registered ACIF code?

Ms Hurley —As far as I am aware, it has not. But certainly if there were non-compliance, ACIF would welcome enforcement action being taken.

Senator CONROY —In your submission you criticise the Consumer driven communications report, which was less than complimentary about the current self-regulatory regime. You indicate that its criticism was unwarranted, because it did not give examples of the failure of the regime. Can I turn to a number of examples of the practical operation of the current self-regulatory regime for telecommunications to get your views? Firstly, I want to look at the consumer contracts code, which I know has got a mention already a few times. I want to go through my understanding of the history of it. You recently described the code as a great step forward for industry self-regulation because it demonstrates how service providers and end users can work together to deliver effective consumer protection. Is it ACIF’s view that the consumer contracts code is an example of the effectiveness of the current self-regulatory regime?

Ms Hurley —To back up to the original premise of your question, I think it is a bit harsh to say that ACIF was critical of the CDC report. What I sought to do in respect of the CDC report was to draw out some matters which I think could have been stated more accurately to reflect what ACIF has actually achieved. So, while on the one hand I have addressed the factual matters, on the other hand we have embraced the fact that the report has been delivered, because it gives us the opportunity to review our approach to consumer participation. We have welcomed it as an opportunity as well.

One of the issues that I did raise in relation to the paper was that it was difficult to understand what the criticism of ACIF’s outcomes was—whether it was a matter of the substance of the code being ineffective, the process being ineffective, compliance being ineffective or whether it was enforcement. It was difficult to respond without those matters being actually articulated more fully.

In respect of the consumer contracts code, I think it is a real testament to the members of the working committee who sat around the table and who developed that. It was not an easy exercise; it was very complicated and they did it with tremendous will. They brought together completely disparate issues and managed to get consensus on a code. So I would say, yes, that is a testament to an effective outcome.

Senator CONROY —How long did it take ACIF to develop this code—you said it was disparate and hard to pull together?

Ms Hurley —It was done in a six-month time frame.

Senator CONROY —I thought it was closer to 10.

Ms Hurley —Well, six to 10. From the first working committee to the time it was completed in December it was close to six months. Then there was a process of finalisation afterwards before it went to the ACA for registration.

Senator CONROY —How long will it be before the code comes into effect?

Ms Hurley —It will be from the time that it is registered. There are provisions in there—effectively it is a six-month time frame.

Senator CONROY —Carriers are given six months from the date of registration to comply?

Ms Hurley —That was what was agreed in the working committee, yes.

Senator CONROY —Was this code the first time that ACIF had addressed the issue of consumer contracts?

Ms Hurley —There was a guideline prior to the code.

Senator CONROY —That was not enforceable by the ACA?

Ms Hurley —That was not enforceable by the ACA, no.

Senator CONROY —This guideline was released in December 2002?

Ms Hurley —As I understand it, yes.

Senator CONROY —How long did this guideline take to develop?

Ms Hurley —I was not there at the time. I am sorry, I cannot answer that.

Senator CONROY —Do you know why this guideline was developed?

Ms Hurley —I presume it was in response to a need which had been identified to address the issue.

Senator CONROY —In November 2000 the Communications Law Centre lodged with ACIF’s Consumer Codes Reference Panel the results of a research report funded by the Department of Communications, Information Technology and the Arts and the Telecommunications Industry Ombudsman titled Unfair practices and telecommunications consumers. So in November 2000 there was a report funded by the government and the ombudsman into this issue. To industry observers, there has been a problem with unfair contract terms since at least 2000. Would you characterise the guideline that ACIF produced in response to this review as an effective example of self-regulation?

Ms Hurley —It was certainly a response. My reading of the second CLC report into whether or not it was being complied with was that there was increasing compliance with the guideline.

Senator CONROY —In fact, the ACA commissioned the Communications Law Centre to undertake a review of carriers’ compliance with this code, didn’t it? This report found that the carriers largely disregarded the code, didn’t it?

Ms Hurley —There were actually two reports, as I recollect, into whether or not there was compliance with the guideline. The second one certainly indicated that, whilst it was not to the level they may have wanted, there was certainly increasing compliance.

Senator CONROY —The ACA described the results of this review as ‘disappointing’.

Ms Hurley —They did.

Senator CONROY —And that they show there is ‘a need for significant improvement in the contractual environment for consumers’. Is that right?

Ms Hurley —They did.

Senator CONROY —On this basis the ACA determined that ‘it is unlikely that a voluntary industry code would be developed within a reasonable period in the absence of a formal request’ from the ACA, and the ACA then directed ACIF to develop a new code for the ACA to register and enforce. What time frame did the ACA set down for this code to be developed?

Ms Hurley —There are a number of conflicting time frames that came out from the ACA. I could not even tell you, actually, what the original one was.

Senator CONROY —The original one was six months to May 2004, and ACIF did not meet that deadline, so it was extended until October and then extended again until February 2005. It could be another 12 months until the code actually requires carriers to take any action to comply with the code—that is potentially six months for the ACA registration and six months for carriers to comply. So it has taken the self-regulatory regime that you have discussed six years, after being presented with an authoritative report outlining the problems consumers face with unfair telecommunications contracts, before it was able to introduce an enforceable response.

Ms Hurley —I think it is unarguable that the response before the consumer contracts code began took too long.

Senator CONROY —You indicated you have only been with the organisation for 12 months. I do not think you can take any personal responsibility for the six-year time frame, but the point does need to be made that the self-regulatory regime took six years to actually do its job.

Ms Hurley —That is noted, and then once the response was put into place there was a very focused attempt to develop a code, which came up to a very high standard.

Senator CONROY —Sure, but this is six years of carriers exploiting consumers through unfair contracts and unfair terms. How can one describe the self-regulatory regime as not needing any change and working fine? There were six years of consumers being exploited after the problem was actually identified—never mind the fact that it took a while for it to actually be identified.

Ms Hurley —The outcome also needs to be acknowledged that the consumer contracts code is the first time anywhere in the world that there has been an industry response to dealing with unfair contract terms.

Senator CONROY —The Victorian government took action on the issue before ACIF. That is correct?

Ms Hurley —As I understand it.

Senator CONROY —They legislated. That legislative prohibition introduced in Victoria has already claimed a scalp, hasn’t it?

Ms Hurley —It is not something that ACIF has been involved in.

Senator CONROY —Consumer Affairs Victoria has already taken enforcement action against a carrier for the use of unfair terms, even though the legislation has been in place for less than a year. On top of this, Telstra rewrote all of its consumer contracts in response to the legislation, something ACIF had comprehensively failed to achieve in six years. Consumer Affairs Victoria seem to be protecting telecommunications carriers more effectively than ACIF or the ACA, and, as you said, it is the ACA’s job ultimately to enforce this. What steps is ACIF taking to respond to the problem of unexpectedly high consumer bills?

Ms Hurley —We are currently doing a revision of the credit management code and we will be completing that within a six-month time frame. It will address issues of credit assessment, tools to be put in place and responses required when there are issues of difficulty and hardship.

Senator CONROY —You can give us a promise it is not going to take six years?

Ms Hurley —I am committed to timely outcomes at ACIF.

Senator LUNDY —I have a couple of questions. We had some discussion with the previous witness about the possibility or benefits or otherwise of amendment or repeal of part 23 of the Telecommunications Act, which, depending on which side of the fence you sit, creates ambiguity about the power to vary a contract without mutual consent of the parties or not. Does ACIF have a view on repeal or amendment of part 23?

Ms Hurley —ACIF’s role is to respond to and implement the government policy of self-regulation within the framework in which it is created. It does not set itself up as the policy maker.

Senator LUNDY —So you do not have a view?

Ms Hurley —No, I do not have a view.

Senator LUNDY —The previous witness also expressed a view that one of the options, at least, was to beef up the unconscionable conduct provisions of the Trade Practices Act as a way of dealing with the unfair contracts issue. I presume I know what your answer is going to be to this, but I will ask you anyway—what is ACIF’s view of that particular course of action?

Ms Hurley —Again, it is not an issue that we would buy into. All I would say is that the ACIF codes form one part of the overall framework for consumer protections. They do not supplant what is either in state or federal legislation.

Senator LUNDY —Thank you.

Senator TCHEN —Ms Hurley, this follows on from your response to Senator Lundy’s question about what ACIF’s role is. This is probably a bit from left field, but from the point of view of ACIF and the industry, do you regard consumer involvement as a potential driver for the industry, in terms of its development, or is it simply a defensive mechanism for making things easier?

Ms Hurley —It is something that we have always embraced. We see that unless we have consumer involvement, trust and confidence in the whole self-regulatory framework then it will not succeed.

Senator TCHEN —Yes. I expected you to say that, and that is exactly why I asked my question, because there are two reasons for embracing this approach. One reason is that you see it as something necessary for your development and the other is simply that if you do not deal with this you cannot have development. That is the difference there. The reason I asked that question is that to a large extent, from my experience, even the consumer advocates tend to take a defensive approach. Yet it is very important because, firstly, it could entirely change the nature of the competition and, secondly—and this is particularly important—it could change our approach to technological development. Notoriously, technologists are the people who believe that you make a better mouse trap and the world will come to you. I ask again whether, in your view, the industry sees consumer involvement as an absolutely essential, positive thing or as something which is necessary.

Ms Hurley —It is seen as something which is absolutely essential, because, to the extent that the industry comprises businesses, a business does not succeed unless it takes into account consumer interests. What do its customers want? It is an essential part of the industry.

Senator TCHEN —What do they need or what do they want?

Ms Hurley —Both.

Senator TCHEN —So if, for example, the consumer advocates all pack their bags and go home—they are not going to argue anymore—will ACIF still be necessary?

Ms Hurley —Yes, because after ACIF has done its work you have the ACA, which looks to see whether any codes related to consumer protection would be registered on the basis of adequate community safeguards. So they would be making that assessment on the basis of a different process of development.

CHAIR —Thank you, Ms Hurley, for that evidence. It was very helpful. Good luck with the new code and I hope your enforcement action and all the rest of it is done nice and fast.

Ms Hurley —Thank you very much.

[10.24 a.m.]