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Thursday, 21 February 2008
Page: 1195


Mr BILLSON (10:15 AM) —I am here on my own, regrettably, and I do not have those chiselled good looks used as the backdrop for the minister’s photo. I speak today to support this bill. The Trade Practices Amendment (Access Declarations) Bill 2008 comes at a time when the telecommunications sector is looking for greater certainty in relation to the regulatory regime. It is a time when, sadly, the competition framework embraces ‘negotiate’, ‘arbitrate’ and ‘litigate’. We seem to go very quickly over the ‘n’ and the ‘a’ to ‘l’ for litigate. It is a sad process because that ready pathway to litigation does of itself have quite an impact on competition in the telecommunications sector. You could say that competition delayed is competition denied.

Honourable member interjecting—


Mr BILLSON —Thank you very much. I am reminded that I have got 29 minutes left, and I am grateful for that wise counsel. You saw recently—and I am picking up the theme of competition delayed is competition denied—a determination in favour of Primus. I remember reading Ravi Bhatia’s comments that that outcome to his favour and to Primus’s favour, as welcome as it was, had been delayed to such a degree. Whilst the question of fees and access charges, those fiscal issues, could be remedied, he was pointing to the disadvantage his company had in actually competing in the marketplace while these issues were to be resolved. So it is an interesting time in terms of regulation. I would say this particular bill is another renovation of the regime. You have seen a number of renovations through the former government—steps in the right direction, I believe, as this one is, but it does raise questions that I will come to later about the broader framework in general.

The Trade Practices Amendment (Access Declarations) Bill 2008 amends the Trade Practices Act to provide clarity and certainty for the telecommunications sector by confirming that access declarations made by the ACCC are not and have never been legislative instruments. The reason for this needing to be made clear—and the bill goes to great lengths not only to make it clear but to reiterate that point over and over again, in fact—is very important. That clarity must be there because, as I mentioned earlier, there is this environment in which litigation seems to be a favoured tool of some as they sort through the commercial argy-bargy of access and pricing. A recent case does give rise to what might even be another avenue of litigation, and this bill seeks to cut off that avenue by making it clear that the works of the ACCC, its access declarations, are not legislative instruments and therefore cannot be challenged on the basis that they have not been lodged and recorded on the Federal Register of Legislative Instruments or tabled in parliament. The point here is that if they were legislative instruments and they were not registered or tabled in parliament, then that would be an avenue by which to challenge, to attack, the validity of them and therefore there would be another avenue of litigation to be argued. What this bill is saying is that they have never been, are not now and are not going to be in the future legislative instruments. Therefore to the players that might think there is some commercial advantage in saying the process was wrong because they were not tabled or registered it says: ‘Don’t waste your time. Get on with the business of providing a competitive telecommunications framework and focus on business priorities and commercial avenues by which to push your case, not litigation.’

I am pleased that my parliamentary colleague and friend Mr Dutton has joined us. As the member for Dickson he carries the opposition’s role in the area of competition policy. It is always a pleasure and an honour to work with him. This bill reflects on a Federal Court decision involving Roche Products Pty Ltd and the National Drugs and Poisons Schedule Committee. There was some concern that the determinations of the National Drugs and Poisons Schedule Committee actually amounted to a legislative instrument. Even though the determinations were addressed and analysed, and their work was seen as a proper administrative decision in that case, that administrative decision was challenged. It was argued that it was legislative in its character, that it should have been a legislative instrument and that it was therefore open to legal challenge. Whilst that is not directly related to the telco space, the thinking was that if that was a challenge that was tried on in the drugs area it may be something that the lawyers would have salivated over and picked up in the telecommunications space. They could then have argued that the ACCC declarations were of a similar kind—that is, legislative in their character—and therefore the declarations were invalid because they were not registered or tabled before parliament.

This bill makes it clear that this is not the case. Access declarations are administrative determinations and do not need to end up in this parliament or be registered to take effect. This is aiming to cut off some of the litigious activity that seems to dog many of these issues in the telecommunications sector. It is an area that causes great upheaval, disruption and combativeness. It focuses some of the brightest minds and sharpest intellects in the telco sector on litigious avenues and legal argument rather than  on the business case and on consumers, to which we hope they would apply all of that horsepower and capability. So there should be no doubt about the validity of those access declarations, and the bill reinforces that point. It is an appropriate renovation of the competition framework at a time when it is going to come under increasing stress. I would like to touch briefly on that.

The ACCC has a difficult job. Telcos are not shy. They are happy to run their argument, run their case and invest heavily in it, seeing some opportunity for commercial advantage to themselves or disadvantage to their competitors. So the ACCC is caught in an atmosphere of world championship wrestling and has to referee some of these issues. The ACCC’s work at the moment is quite encouraging, in that some of its energy is being focused on understanding where competition itself will provide proper remedy, safeguard and long-term interest for the consumer. I welcome and encourage the participation of all in the telco sector in the current work of the ACCC: a stocktake of the telecommunications infrastructure. That work is crucial in identifying a view that where you have three potential providers of service and access the ACCC need not be involved in issues of access and pricing determinations. Trying to identify where competition will meet the market need is good work. The ACCC need not concern itself overtly with questions of access and pricing to those pieces of infrastructure.

I call it the ‘tribuy’ opportunity, where service providers and the consumers have an opportunity to choose between three potential infrastructure providers, and therefore the competitive pressure looks after the consumer interest. The work that is going on to establish which parts of the network offer the tribuy is very different from the try-ons which you see in the litigation space. I encourage wholeheartedly the work that the ACCC is investing—and the effort and time that the telecommunications providers are also investing—in that audit, in that evaluation. I do not think it should be viewed as a regulatory red tape imposition. I assure the ACCC and the telco committee that I will not argue that it is. It is a very wise investment of energy to see where the competition framework does not need the mentoring and pastoral care of the ACCC and where the consumer interest is being reflected in the competition framework.

Contrast that with some of the debate that is going on around the Rudd government’s confused, foggy, contradictory, ever-moving feast around the fibre-to-the-node network. I suppose with $4.7 billion of taxpayer money being waved out there in a tantalising way in front of telecommunications providers you could imagine how excited they all are. The thing that troubles me is the complete lack of clarity about what the plan is, how this proposition is going to work within a competitive framework that has the consumer interest at heart, and also the extent to which the Rudd government involves itself in a market where we are trying to encourage and foster competition—how it is going to involve itself in what would appear to be a renationalisation of some of our telecommunications infrastructure. It is very unclear, troubling and deeply concerning. I can understand, by the frantic activity that is going on among those involved in the sector, that it is another opportunity for positioning.

Let me run through some of the challenges. In this parliament in the coming days you will see the Rudd government raiding the Communications Fund. In a nutshell, they are pinching the resources set aside to respond to identified disadvantage and inadequate service provision in the telecommunications sector for regional, rural and remote communities. I will not go into the detail of it, other than to say how ironic it is that the Glasson review—the independent review into regional communications, services and infrastructure—is being encouraged. In fact, I saw a press release from Minister Conroy encouraging its work. I notice he did not mention that there is legislation before the House to pinch the very resources needed to implement that work. That work is about making sure that where there is competition and a commercial case for delivery of adequate services those services are available to people in remote and rural areas. That is perfectly relevant and sound. In a public policy sense, it is a very wise application of taxpayer resources—where the market is not able to address those needs and we as a nation have a public policy ambition to address that shortcoming.

Contrast that with the fibre-to-the-node proposal. The commercial sector have said they are happy to do it, as long as they get the outcomes they want under the competition framework—outcomes around an access regime and pricing. It is a very interesting plan. The market are saying they are ready to invest and the government are saying, ‘No, we want to bump out your investment and use taxpayer resources.’ That is novel. It is difficult to imagine what the public policy motivation is, other than juicy headlines for the government—a government that has form chasing juicy headlines. Look at the recent conversation held in the media about Telstra’s decision to turn on ADSL2+. That capability, widely known to have been available for 18 months, was only activated when a competitor came into the area offering faster speed services. Telstra said, ‘We’ll turn it on where there is a competitor, but where there is no competitor, even though it is resident in our exchanges, able to be activated and will improve a service that consumers have access to, we will not turn it on because there is some concern or confusion about access declarations and the application of the competition regime.’ How ironic that precisely nothing had changed in that regime—the regime argued as being the impediment to turning it on. Yet those ADSL2+ services have been turned on. Here the competition regime was being used as some kind of smokescreen which was hiding a telco provider’s commercial decision about when to make a service available that was ready and able to be turned on.

The Rudd government claims some credit for that. In fact, the Prime Minister stood up in parliament and said how great it was that the decision the minister took facilitated that outcome. How ironic that just days earlier on Inside Business on the ABC the minister was asked about that very point. Speaking in the third person, he said there was no decision for Stephen Conroy to make. ‘There was not a decision that I could make.’ So we see the Prime Minister taking great credit for something that could have been done by Telstra 18 months earlier, claiming that some intervention by the government had brought about change. Then we see the minister, to his credit, being quite open, frank and honest in his account—in vivid contrast to the claims being made by the Prime Minister. And then we see services coming on. Again, the competition framework was being used as some kind of Trojan Horse to make other arguments to position commercially when there was no impediment.

Then we read where Telstra say some regulatory forbearance had been brought into play and that that was what promoted their decision. The question the Rudd government has to ask, the question the telecommunications industry wants answered and the issue which must be of great concern to consumers is: just what was this regulatory forbearance? Was this some kind of sweetheart deal about fibre to the node? The Labor proposal is based on a Telstra proposition. Labor’s opposition to wireless has been long established. Yet for a continent as vast as ours, surely wireless needs to be part of the equation.

Then you see the next issue: how is it that Labor is promising to invest $4.7 billion in a broadband network when the commercial sector is saying, ‘We’re happy to do it’? So we are putting taxpayers’ money into something which the private sector is happy to fund. We then have issues about who is going to own the infrastructure the taxpayer is paying for. We have Labor claiming that it would go forward on an equity share model and get a commercial rate of return so as not to distort the market and in more recent times, in that very same interview, Senator Conroy was saying, ‘Well of course, that would be nice, but we’re not hung up on it.’ To Alan Kohler’s credit, he said, ‘You’re just going to give cash away?’ Senator Conroy said, ‘No—maybe, but we’re not hung up on needing an equity share model.’ In the background, we remember Telstra’s comments about kumbaya and how they weren’t in the business of embracing a taxpayer, a man of money, to see the government as a shared owner of some network. They would rather the freedom and liberty to run their own networks the way they should. So was that the regulatory forbearance or was it really policy forbearance—the ALP’s decision to junk its pre-election commitment of an equity share model with a commercial rate of return for $4.7 billion of taxpayers’ money and the private sector saying, ‘No, we can do much of this ourselves’? Is that really what was being talked about?

These questions are live issues for all Australians who are interested in telecommunications. These questions go to what kind of pressure the Rudd-Conroy, yet-to-be-described model will bring to bear on a competition framework that is being renovated today to take account of new emerging pressures, which is constantly under duress and litigation. Then are we going to throw in a renationalisation of a part of the telecommunications network? It was extraordinary watching estimates the other night as the minister was asked, ‘What’s this $4.7 billion going to buy?’ He could not answer that question. Australian taxpayers must wonder—$4.7 billion is being waved around as some kind of honey pot for a yet-to-be-defined project, with a yet-to-be-clarified basis for people even accessing that money, where the public policy interests do not seem to crack it much for a mention.

How is that $4.7 billion going to be spent? If it is not an equity model, what is it going to be? If it is not renationalising part of the network, what is it going to be? If it is not a direct attack on the ambitions of a communications industry policy of open access, which has been fairly consistent for some time, with encouraging investment in competition being the core basis of public policy making, what is it going to be? It is hard to know. Would you put the $4.7 billion into the inert part of this network and then allow telcos to bolt on their appliances, making use of the fibre—having some dangly end bits around the different places and you could bolt on whatever applies? Who knows? Is it to own the distribution point at the end of the fibre? Is it to say that some companies are going to think all their Christmases have come at once? They will get $4.7 billion for a venture which they say they will finance themselves. Is this like a silent equity or a shareholder not looking for a return? Is it just to get a spot on an annual report of a private sector company, saying, ‘Here’s $4.7 billion of taxpayers’ money,’ just so we can pat ourselves on the back and say, ‘Hey, we’re involved in something that was going to happen anyway.’  These are really compelling public policy issues. I invite the Australian public to turn their minds to them, because many in the telco sector have turned their minds to them. They are wondering how they get a piece of this love and what is required of them in return.

How will this concept, yet to be defined, bolt into our competition framework? Will it make our renovations of the competition framework largely redundant and in one project wipe that out to the point where we may as well rebuild from scratch? Who knows? These are important issues that need to be addressed. These go to the heart of the competition framework. These also go to the heart of what the consumer wants and it is extraordinary how little voice the consumer has in this debate. I am told that there are nearly a million customers using the internet via dial-up services today. They have got other options but they have not exercised them. I am told there are other customers who would love to have ADSL2 but while the technology has been in place some commercial decision has been made not to turn it on so they have not been able to access it. I have got others who are talking about this holy vision to just keep chasing more and more speed—but no-one asks: at what price?

You will see a new pressure come into play—the three Rs. People will want to have the right speed for their applications. Not everybody needs to have crisp, pay TV quality moving images on their screen and therefore the bandwidth to support it. People say, ‘No, I want this speed for my particular applications.’ They are told that they can have a much faster speed but they answer, ‘Yes, but it is four times the price that I want to pay.’ So there will be this ‘right speed, right price’ debate. Then there will be the issue of what it costs for you to download material. If you have Boeing 747 speed to suck down material and then you realise you blow your download limits within five minutes and you are up for more cash, you will think about that. Then the issue of reliability will come forward, where people want to make sure that they have got services that are there all the time. Some of my friends tell me that for their businesses they actually need to have two broadband providers because usually neither them is up all the time. These are pressures on the competition framework. These are the new challenges that are emerging. These are a sign of some of the work still ahead of us at a time when we have got this renovation of the competition regime that we have today. It is a welcome renovation to try and at least take a little bit of the ‘l’ out of litigation. We hope that there will be negotiation and arbitration and then that litigation will be the last stop, not just the known destination with other steps on the pathway.

I commend the bill to the House. But I invite the House, the government, the telecommunications industry and the consumers to reflect on the journey—yet to be defined—that we are about to take. All I know is the ticket for that journey is being waved around at $4.7 billion—taxpayers’ dollars—but nobody can tell you quite what the destination is. This is a time for great reflection to see whether renovation, again, will be enough or whether the government through its lack of clarity is creating some extraordinary regulatory and competition policy challenges it is yet to turn its mind to. I think that is where the real work will be in the coming years. I look forward to being a constructive contributor in that process but I also look forward to holding the government to account for what is a poorly defined policy with enormous resourcing implications. But what sits behind that is that it could be a fundamental and potentially terminal strike on the competition framework for telecommunications in this country if the government gets it wrong. At this time, sadly, there is not a lot of confidence in what the government’s plans are because no-one knows what they are. There is therefore even less confidence that our regulatory framework has the consumer interest protected, embraced and nourished or if we are just going to set up another set of extensive renovations to paper over the errors that may be made with this fibre-to-the-node concept. It is ill-defined and some would say ill-conceived. It is certainly something that people are looking for more clarity on.