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Wednesday, 13 November 2002
Page: 8890


Mr HATTON (12:43 PM) — The Telecommunications Competition Bill 2002 is finally being debated. I find the situation a bit strange and a bit precipitate in a way because the government has been toying with this legislation since about April this year. It took them from April to September to actually put up a draft bill. The government realised there were a number of significant issues and, given that the relevant minister is based in the Senate, a Senate inquiry has commenced into what is canvassed in this bill. You would have thought it natural, with the relevant minister being Senate based and having initiated a Senate investigation of what needs to be done in the area of telecommunications competition, for the government to wait for the Senate to complete their investigations and report to the Senate before it brought the bill before the House. This is quite an extraordinary way to go about government business. But maybe it is part of Senator Alston's new and quick way of getting a quick flick through on this.

The Estens inquiry report was recently released—a strange sort of business that was, too. Having had the Besley inquiry—and we know how that was put together and engineered—we had to get a relatively new National Party member to do a job on what the current provisions are and whether they have been better since Besley. He has put out that report and now they are whacking this bill straight into the House. You might think there is a bit of fire under the government to try to do something about Telstra and to attempt to convince people that a bit more is being done than what we have actually seen. Compared to a number of the bills I have spoken on today, this is a relatively weighty one. We see an explanatory memorandum that is weighty, but only time will tell how significant it is. In its printed form it is quite thick—you will see this when you print it from your computer to have a look at to prepare your speech. It has been a bit hard carting it around all morning.


Mr Hardgrave —How many kilos?


Mr HATTON —It would be about 0.8957 of a kilo. There are a number of provisions in it that go to the question of how you should attempt to regulate competition in this area. I want to make a couple of comments about the member for Ryan's speech. He is a great step forward from the previous Liberal member for Ryan. Jack Moore used to wander into the place and sort of deign to give us a bit of advice during ministerial answers: that everything was fine, that everybody knew what the government's defence policy was or whatever other policy it was, that it just happened to be well known and that, owing to the fact that it was well known, that was about it—everybody should relax and go back and worry about something else.

The problem that the new member for Ryan has is that he actually quite nicely believes most of the propaganda that his lot put out, and he has been pulled in by it. You can understand it; there is somewhat of a naivety there and an absolute interest in this area. In fact, we are colleagues on the Standing Committee on Communications, Internet Technology and the Arts. We work very well together, as we did during the wireless broadband inquiry. I may come to that because we found out a great deal about telecommunications service and the problems in terms of competition in the country during the conduct of that inquiry.

So we have a long-awaited and relatively weighty tome and an explanatory memorandum which try to speed up some changes within the regulatory environment and to address some of the key problems that people have put forward over a considerable period of time. The Productivity Commission has not generally been a friend of people who want to take a laid-back approach to these things. They have always been in there trying to pull apart certain entities to change their whole nature, and they have been driven quite ideologically. So giving them the kind of reference they had in this area was just their sort of meat. But there were a series of underlying problems.

One of the key problems we have is that Telstra is no longer 100 per cent government owned. When it was, you could tell it what to do and ensure that there would be responsibility taken on the part of the people who were running it, including the secretary of the department, that they would comply with the minister's instructions. Given the nature, strength and depth of the biggest business in this country—which it was and is; whether under the old name of Telecom or the new name of Telstra—this is the most vital, the most important and the most significant 19th and 20th century business we have had, and it is the most important 21st century business. It provides the railway lines of the future to knit the entire economy together, which is a critical thing to understand about the utilisation of the Internet—as it has been in its World Wide Web phase since 1995— through the communication pipes that Telstra in particular provides.

We now have Optus providing the same kind of infrastructure and there are queries about just how effectively that is operating. We are also seeing further duplication of those optical fibre pipes in regional areas of New South Wales and Victoria. There have been other propositions put forward to spend—in the case of what Lucent proposes—$600 million to provide an even more advanced optical fibre infrastructure for Australia but, of course, concentrating on the core business connections between Brisbane, Sydney and Melbourne. The fundamental pipes that carry information around carry information not just between individuals but between company and company and between companies and business.

The ways in which business can effectively do their business much better, in a leaner and a more efficient way, has been wonderfully demonstrated by Ford and General Motors and what they have done in the United States. Because they took up the B-to-B model of e-commerce and used broadband access between themselves and their suppliers, they were able to cut their costs by 40 per cent. That is a really effective way of using modern technology to renovate an old economy business—it is the way in which you take steps forward to run a business more efficiently and more productively and it is the way in which we are attempting at the moment to do these kinds of things at government level. Apart from Telstra being the biggest business, the government is the biggest user of goods within this economy. It is the one with the biggest demands. What we see outside in the Mural Hall for E-government Week is a demonstration of the way in which, basically since the Web's introduction in 1995, there has been an utter transformation of the way that government provides information.

The Japanese government does not do it in this way. The Japanese government does not yet have that technology available, despite the fact that they lead the world in the production of electronic goods, consumer goods, a lot of computer goods and also transistors. You can walk into MITI, as I did last year— their main industry department, which until a few years ago effectively controlled the Japanese economy—and in a very large room, about the length of this House, you will find one computer in the corner and stacks of paper, from floor to ceiling, running along the entire wall. Time on that one computer was available to about 1,000 people on the floor, as and when they might need it. Japan is one of the most sophisticated economies in the world in terms of producing things, but evidence is that one of the critical problems it has, when it comes to running its own government and looking for efficiencies and so on, is that it does not reinvest in its domestic economy and infrastructure.

The new Prime Minister, Mr Koizumi, made a great change a year or so ago when he mandated that, within three years, every Japanese government department would have to be completely computerised. Good luck to them! I think it will take them longer than that three-year period, but it is something that needs to happen. Not only is it something that it is necessary for the Japanese to do; it is something that it is necessary for us to do. Why? Because we need to run our own show more effectively. We need to be able to use the communication mechanisms we have got, provided through Telstra and its competitors, to feed information back and forth more effectively and more efficiently.

Once the first 33 per cent of Telstra was sold, we had a government monopoly sold into a part private, part government monopoly. Now that half of Telstra, just under 50 per cent, has been sold, we have a situation where those people who put their money on the line in T1 did not pay enough money for the shares they got—the government sold the shares at a dramatic discount—and the people who bought shares in T2 found they paid too much. It is important that we do not have T3, because governments around the world have been able to run—with difficulty, because it is a lot harder than running just a telecommunications company that is completely controlled—a public-private company.

With a public-private company such as the one we have now and with what we see before us today in the Telecommunications Competition Bill 2002, these sorts of incremental changes are absolutely necessary, because the monster that has been let out of the cage is a monopolistic one. It is a company that has almost total control of what happens in telecommunications in this country. You do not have to try very hard to prove this: ask a few consumers or consumer organisations; they will tell you a few stories about it. Ask the people who are attempting to compete with Telstra. Ask those companies which have to go to the ACCC to put and argue their case that Telstra are not allowing them access on an equal basis. Ask those companies which are too afraid to go to the ACCC because it will cost them too much money or because Telstra will belt them over the ears or use mechanisms to try to drive them out of the business.

There is an uneasy association with Telstra, which has over 90 per cent of telecommunications industry profits and around 75 per cent of market share. The reason it has 75 per cent of market share is that, when our lot were in government and the decision was made to bring in Optus as a competitor, initially, there was an attempt to create a situation where Optus would have 30 per cent of market share, and enormous efforts were bent to that end. After a five-year period, further competitors were to be introduced— which has happened post 1997, as was originally laid down. I never thought that was a good way to run. I thought that the model that was originally proposed—to retain full control and ownership of an Australian telecom or Telstra and flog off OTC to deal with the problems that we had with the satellite—was a much more sensible way to go about it. But, hey! This is politics. This is what parties decide. The decision that we made has determined the course of telecommunications policy within Australia since then. But to take an entity that is as powerful and as deeply embedded within the business and service community in this country as is Telstra and to let it, virtually untrammelled, do its business and have its way with its competitors is irresponsible.

The responsibility lies with the government—given that they have flogged off half of this entity and given that they want to flog off the rest—to ensure that Telstra does not become a One.Tel. We remember One.Tel— part of the government's model of the brave new world in which we would have new companies emerging that would provide better services to Australia than does Telstra, that would gather an enormous amount of money and that had support from both Murdoch and Packer. There still are considerations in our courts in relation to just what did happen to One.Tel—why it fell in a heap and why so much of what was promised turned out so badly for consumers and those people who were dudded by becoming part of the share play.

One.Tel could be the model for what Telstra will become, because the key players in this communication area—key players who do not want all that much competition—are not only those people who currently are running Telstra but also those people who want to own and control the entity, who want to control Australian communications throughout: the Murdoch and Packer groups. Look at the current associations between PBL and the Murdoch group and the way they interact and the connections between Optus, Foxtel and Telstra and the deals that they have done that have been convergent. Look at the models that have been moved forward. There will be only one provider. There is one dominant provider now that is virtually untrammelled, and that is still Telstra. It was fully owned; now it is only partially owned. But, if we get to a situation where this government is allowed by this parliament, either now or after a double dissolution, to sell down the second half of Telstra, any form of control of that entity will be lost. It will be an absolute monopoly. But ownership of that absolute monopoly—and, more importantly, the control—inevitably will pass. The control will pass from that relatively small number of Australians and Australian institutions who bought into the 50 per cent. It used to be that 19 million Australians owned the lot; now a much smaller number of those own part of it. Control will inevitably pass to those centres of power within the communications area that dominate our life—social, political and cultural—now: the Murdoch and Packer groups.

We have already seen the extent to which the people currently running Telstra want to get into bed with those two groups. The mob who are currently running Telstra want to buy the Nine Network, thank you very much. It is just like Alan Bond walking up to Kerry Packer more than a decade ago when he said, `I will give you $1 billion for Channel Nine,' and Kerry said, `Thanks very much, and I've got first refusal if you decide to flog it.' Three years later, Bond sold Channel Nine back to Packer for about $250 million. Kerry Packer made about $800 million out of the deal—he saw Bond coming. Kerry Packer can see the current Telstra board coming. This board is so dopey that they have gone off to do some really strange and ridiculous deals in South-East Asia. Have a look at what they have done in buying their way into the mobile telephone market in Singapore. Have a look at the valuation of the company they bought into—deeper and deeper. Have a look at the forays they have had into the Internet area.



Mr HATTON —You will get your chance, pal. The core issues that we are dealing with here are about how to trammel this entity which was properly monopolistic and is still monopolistic, with 75 per cent market share but earning 90 per cent of the moneys coming out of the telecommunications market. Unless you are a robber baron—with a mentality like the Rothschilds and the Morgans in the United States from the 1870s to the 1890s—you cannot have a total monopoly, whether it is in oil or in communications. You need some trust-busting, some antitrust legislation. You need some absolute controls. The controls in this bill are minor. We need to go a hell of a long way further.

Whether you talk to the customers, the suppliers or the competitors, they are in a disadvantaged position relative to Telstra. A strong government would be certain to keep profit of $1 billion to $2 billion per year rolling into government coffers—that is what has been happening, an assured line of credit to Commonwealth coffers. Part of it has been going to the community and the rest has been coming back to the Commonwealth. It has been used to improve competition within the industry, to improve services in rural, regional and metropolitan Australia and to help create the foundations of the future Australian economy. That profit would ensure, through active government work, that telecommunications work properly and effectively with real and not false competition. If the government sells Telstra outright, it will be giving control to a very small number of people in this country.

There is no way a government can regulate a monopolised, 100 per cent privately owned Telstra. The minister will attempt to tell us that, but it will not wash. Unfortunately, if they achieve it, every one of the 19½ million Australians will have to pay for it from now until kingdom come. At least the Prime Minister understands the markets a bit better than he used to. If Telstra is sold at relatively less than it is worth—and given the go-ahead, the Prime Minister will try to maximise the price, he tells us—we will get a one-off hit. With this one-off hit, debt could be reduced for a short period of time, but the Treasury does not know what they would do because it would destroy the government bond market in the first instance. (Time expired)