Senator SCHACHT(3.33 p.m.) —Before the interruption of the debate at 12.45, I was speaking to a number of aspects of the opposition's amendments on price discrimination. I will not repeat the things I have already said. I was also responding to the remarks of the Minister for Communications and the Arts (Senator Alston) in defence of his proposition on price discrimination, that it be done on an averaging basis.

I now want to turn to the question of how the minister is going to prepare his proposal for price and I want to try to get from the minister more details of this price averaging arrangement which he says will deliver bigger cuts in telecommunication local call rates in non-metropolitan areas. First of all, this is not being done by legislation. It will be done by a disallowable instrument as part of the Telstra act and it will only relate to Telstra. We believe that is a deficiency in that we do not believe Telstra should be picked on. All carriers ought to be accepting the same obligations, in our model, to provide the same rates reductions into rural areas.

What I am particularly concerned about is that the minister has not yet given us the details with which to make the comparison between his proposal and my proposal, of which I have spoken to him, which is in an amendment form. Because we will not see that here in the chamber, because it is a disallowable instrument, I think there is an obligation on the minister to explain to the committee how it will work.

For example, we need to get a clear definitional understanding of which markets are going to be in the averaging arrangement. Will it be the major metropolitan markets? Will it be a market definition that the minister himself will determine and put into the disallowable instrument and be able to change from time to time if he chooses? Of course, it is up to the House of Representatives to disallow it, but the debate on disallowance will always be in this place rather than in the House of Representatives, where the government has a majority.

The next issue I want to try and work out from the minister is: how is it averaged? Is it a running average? Is it a fixed average for a set period of time? For example, is the average immediately readjusted every time a phone call rate changes in one of your defined markets by 1c or 2c? And then is there a change in all of those averages? Or will you, once you have set the figure in the disallowable instrument, specify that the average sit for three months? Six months? Twleve months? When will it be reviewed? Will it be until there is a change in the pricing structure?

These details are not available to the chamber at the moment, in the committee stage. I believe there is a real deficiency in the ability of the Senate to make up its mind about which is the superior structure: ours, which is actually in legislation and, as the minister would use it, represents black letter law arrangements; or his, a disallowable instrument yet to be determined and yet to be explained to us. We would certainly like to know how you work out your averages. Is it a running average? Is it a permanent average? What is the period of time for it? I think those are reasonable questions that we hope you could answer.

The second thing that I want to raise and have clarified is this: in the major metropolitan markets—and I presume that there are going to be only the metropolitan markets—which ones will you determine will be where there is potential for competition? Are we just looking at the Sydney, Melbourne, Adelaide, Perth, and Brisbane markets? Are we putting Hobart in that market as a metropolitan capital city? Which of those markets are in the average? Is there any chance for some of the regional areas, such as the Illawarra, or Wollongong, to be in the market? You can absolutely fix this average according to who you put in the calculation. If there is no competition in a major market like Wollongong or Newcastle—markets that have 500,000 people and, in some cases, are bigger than Tasmania—you will jack the average up.

This is a serious concern because we are not comparing apples with apples. You are asking us to take this on trust. You will tell us that it is a disallowable instrument—and though we can disallow it, if there is a Senate majority, we cannot amend it—and you will then come back with a variation. We all know that you will say to us, `If you disallow it and there is no instrument at all, there are no price cuts at all.' The advantage is always with the government on a disallowable instrument procedure in this case. We want some information about what you would expect to be the market in your averaging arrangement. What we are particularly concerned about is who would make the judgment from time to time on which markets are going to be used for the average.

There is another issue. We know, for example, that there is competition—or supposed competition—in, say, Sydney because Optus has offered the 20c call, once they get their telephony to work, and Telstra may match it. If Telstra goes down to 20c in Sydney but there is no competition, effectively, in Brisbane and they stay at 25c there, when you average it all out, the average price might be 23c or 22c across these markets. Even though Brisbane is defined for the purposes of averaging in the marketplace as a competitive market, will it automatically have its price reduced to the average for Telstra, irrespective of whether there is no competition?

This is something that is still very unclear in the government's model as explained on the record. I have to say, Minister, I have appreciated the consultation and discussion with your officers on this and I think, as a result, I may have a better grasp of what your model is than other senators, particularly those from the minor parties. It seems to me that whatever claim you may make that we will not deliver the bigger reductions that equate with your model for the regional area, at least our model is in the legislation. At least it is transparent.

Again I emphasise those examples of a regional specific nature that you raised and which I have called `the Ballarat example'. If the carrier—Telstra or Optus, or any other carrier—feels that that is not comparing apples with apples, that carrier can seek under regulation exemption to have that considered as a local call zone figure and that would have to be accepted as a local call zone figure for all other areas.

I also want to emphasise again, Minister—although in some of your remarks you criticised me and the opposition for this—that we were not certain because, in 21(5)(b) of our amendment, we had established a review process. On a number of occasions across the table over the last three days both of us have agreed that it is only reasonable to have reviews in a number of areas—

Senator Alston —It is ongoing.

Senator SCHACHT —Yes. It is ongoing. We have accepted that. It would be crazy not to in a deregulated market where we are not sure how it is going to work out. I accept that price discrimination is a major—if not the major—issue in the economics of this whole package. Even if I accepted your model I would still insist and argue for a review to be conducted in the year 2000. Even with your model of averaging, I am not sure whether—even if that got up—that it would deliver and whether it would not have some unintended consequences.

This is about openness and transparency for both the industry and the Australian consumer. In this deregulated model where competition is encouraged, we want to know and want to keep it under review—and it will be a function of a deregulated regime that there will be ongoing reviews. That is why the ACA, the ACCC and all of these areas in your own department are being established. We will probably have more ongoing reviews in this industry than we have had bad dinners together—or bad dinners separately, I should say. I do not think that we have had too many dinners together—or bad dinners together. If I said `good dinners together' that would be a very small number.

You know as well as I do that a feature of this regime post-July will be the endless reviews, and that is only appropriate. If there were not reviews—if there were not consideration after a period of time—we would be derelict as a parliament and you would be derelict as a minister in making sure that the system was working effectively, openly, and in a seamless and transparent way.

So, Minister, I again emphasise: I would like some information from you about how your model is going to work because we do not have that in detail before us. I would like to know how this process of averaging is going to work, and what the process will be for determining the markets that are going to be in the averaging arrangements, and wheth er the averaging will be a rolling average. Will it be for a set period that will be readjusted? All of these lead me to the view that you are less likely to deliver the substantial reductions that country people should get when there is proper competition in the city and therefore, again, I commend my amendment to the Senate.