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Monday, 30 November 1998
Page: 893

Senator MINCHIN (Industry, Science and Resources) (4:44 PM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard .

Leave granted.

The speeches read as follows


As foreshadowed during the election campaign, this bill facilitates the further transition of Telstra Corporation to private ownership. It repeals the provisions of the Telstra Corporation Act 1991 which require the Commonwealth to retain two thirds of the equity in the company. The bill provides for the transition to full private ownership to occur in stages and incorporates significant social bonus benefits flowing from the next sale of Commonwealth equity.

This bill is part of a legislative package which will clearly separate regulation of the telecommunications industry from ownership of Telstra.

This bill contains most of the provisions of the Telstra (Transition to Full Public Ownership) Bill 1998 which was introduced into the previous Parliament. However, there are some significant variations which reflect the Government's response to issues raised during public and Parliamentary discussion of the previous bill.

The bill now provides that Telstra must meet prescribed criteria for service performance for a designated period of at least six months before the Commonwealth can relinquish majority ownership. The evaluation of Telstra's performance in metropolitan, rural and remote areas will be undertaken by an independent inquiry. The inquiry must issue a certificate confirming that Telstra has met the prescribed service standards and provide it to the Minister. The Minister must arrange for the certificate to be published in the Commonwealth Gazette, with the publication date—called the Inquiry Certificate Day—being the trigger mechanism that permits the Commonwealth's sale of the majority of the Commonwealth's equity.

The Telstra Corporation Act is amended by the bill to require Telstra to ensure that at least 2 of its directors have knowledge of, or experience in, the communications needs of regional areas of Australia.

Social Bonus

The Government has included in the bill its election commitments regarding the social bonus from the first tranche of the further sale. The social bonus funding is automatically allocated from the proceeds of the next partial sale when those proceeds reach $671 million, which is the total cost of the social bonus elements. The individual components which are being legislated are as follow.

The Natural Heritage Trust of Australia Act 1997 is amended by the bill to increase the Trust's Reserve fund by $250 million. Enhancement of the Natural Heritage Trust's funding base builds further on what is already the largest environment fund in Commonwealth history.

Up to $70 million is made available over 5 years to establish Rural Transaction Centres in country towns to provide services such as personal banking, postal services, Medicare Easyclaim facilities and telephone and facsimile services.

Up to $150 million is to be allocated over 3 years for the abolition of Telstra's pastoral call rate and to provide access to untimed local calls in extended zones. The funds will be used to upgrade the telecommunications network in remote Australia.

An additional $81 million over three years will be provided to the Regional Telecommunications Infrastructure Fund, which was established from the proceeds of the one third sale of Telstra. $20 million of these additional funds are for enhancing telecommunications in remote and isolated island communities such as the Torres Strait, the Cocos (Keeling) group; Christmas, King, Norfolk, Flinders, Kangaroo and other Islands; and the Australian Antarctic Territories. $36 million is for Internet service delivery in regional and rural Australia, with the aim of providing all Australians with local call access to the Internet. The remaining $25 million will provide 100 per cent continuous mobile phone coverage on key major national highways.

$120 million is to be allocated over 5 years to establish a Television Fund. The Television Fund will be used to extend SBS Television to transmission areas with more than 10,000 people and to eradicate up to 250 television reception "black spots". $2 million of the Fund will be used to establish a New Media Unit within the SBS.

These measures will deliver real and lasting benefits to the community.

Sale Provisions

The sale provisions of the bill are substantially the same as those which proved effective and robust for the sale of one third of Telstra. The sale process is, however, subject to the Inquiry Certificate Day trigger mechanism before the Commonwealth can relinquish majority ownership.

Shareholder Oversight

The bill retains the special provisions which permit the Government to obtain financial and other information from Telstra because of its shareholding, for as long as the Commonwealth holds a majority interest in the company.

The Ministerial power to direct Telstra in section 9 of the Telstra Corporation Act will be retained until the Commonwealth relinquishes its majority interest. This direction power is inappropriate for a privately owned company. Telstra will be subject to a range of appropriate regulatory powers, including Ministerial direction powers, under other legislation, to protect consumers and competitors. This will complete the proper separation of regulation from ownership of the company.

Australian Control Assured

The bill amends the foreign ownership provisions of the Telstra Corporation Act to ensure that the existing 35 per cent total and 5 per cent individual foreign ownership limits continue to apply to the proportion of non-Commonwealth shares following the sale of each tranche. That is, the limits will continue to apply no matter how subsequent share sales are structured.

The requirement for Telstra's headquarters, Chairman and majority of directors to be Australian will be retained irrespective of the ownership of Telstra.

Transitional Provisions—Telstra Employees

The accrued rights of Telstra employees under Commonwealth legislation, such as long service leave, maternity leave and certain retirement benefits, are preserved under the bill's transitional provisions when Telstra ceases to be Commonwealth controlled.


This bill provides an opportunity for Australians to invest further in Telstra, building on the enthusiasm and interest demonstrated by the public during the one third sale.

It ensures that service quality is a precondition for relinquishment of Government majority ownership.

And it guarantees that the social bonus will be delivered, while also enabling further retirement of public debt.


The Telecommunications Legislation Amendment Bill is the third of five bills which the Government is introducing to improve the operation of the Australian telecommunications industry.

The focus of this bill is the enhancement of the existing pro-competitive regulatory regime for telecommunications. The bill also makes amendments to ACCC and industry requirements to improve two safeguards for consumers.

In introducing legislation in relation to the further privatisation of Telstra, the Government is taking the opportunity to enhance the pro-competitive arrangements. The amendments respond to recommendations in the report of the Senate Committee inquiry into the Telstra (Transition to Full Private Ownership) Bill and other issues identified through our monitoring of the operation of the regime and consultation with industry and consumers.

These are sensible enhancements to the competition regime in their own right and are appropriate regardless of the ownership arrangements applying to Telstra.

Main provisions of the Bill

The Telecommunications Legislation Amendment Bill 1998 will enhance competition regulation by enabling the ACCC to codify certain carrier information and consultation requirements; giving a private right of injunctive action for breach of the Part XIB competition rule; enabling the disclosure of specific carrier information, including costs; quarantining specified information acquired from competitors; broadening the ACCC's powers to direct parties to negotiate in good faith; and empowering the ACCC to mediate in access negotiations.

Consistent with the Government's election commitments, the bill contains new provisions requiring the ACCC to provide regular, impartial, public reports on pricing, market share and other competition-related data across a range of specified services. Publicly available data will better inform the market, make competition more transparent and be of clear value in evaluating and promoting the Government's telecommunications reforms and further developing policy. Details of the reporting regime will be set out in Ministerial determinations.

The bill also improves safeguards for consumers by:

. requiring the ACCC to monitor and report on compliance by Telstra and universal service providers with price controls applying to them under the proposed Telecommunications (Consumer Protection and Service Standards) Act; and

. requiring the Australian Communications Authority to make a determination about the extent to which carriage service providers must inform consumers about the terms and conditions governing the supply of goods and services under standard forms of agreement.

The bill contains amendments consequential upon the enactment of the proposed Telecommunications (Consumer Protection and Service Standards) Act, principally changing references to the Telecommunications Act to references to the proposed new act.

The Telecommunications Legislation Amendment Bill will make valuable enhancements to the competition and consumer safeguards in telecommunications.


The Telecommunications (Universal Service Levy) Act 1997 imposes a levy on telecommunications carriers with a view to funding losses incurred by universal service providers in fulfilling the Universal Service Obligation.

This bill amends the Telecommunications (Universal Service Levy) Act to replace references to several provisions of the Telecommunications Act 1997 with references to the corresponding provisions of the Telecommunications (Consumer Protection and Service Standards) Act 1998 consequential upon the enactment of that act.


The Legislation package

In 1997 the Government introduced a new regulatory regime which introduced full and open competition and reinforced and reinvigorated consumer protection arrangements. In general this regime has been working well.

However, the Government acknowledges that in response to its previously announced intention to move to full privatisation of Telstra there was concern in the community about the possible effect of privatisation on service levels.

Public ownership of Telstra will not, of itself, ensure reasonable service levels across Australia. However, in view of the concerns, and to strengthen the customer safeguards available, the Government has decided to adopt a staged approach to the further sale of its shares in Telstra. This package of legislation gives effect to that approach.

The Government is bringing together in this Telecommunications (Consumer Protection and Service Standards) Bill 1998, the consumer and service safeguards so that Australians can readily know what protections are available to them.

The legislation will also strengthen these safeguards where necessary and will provide a Ministerial power of direction over Telstra with regard to compliance with the service standards specified under the legislation.

In a competitive market Government ownership is not an effective means to influence behaviour. The Government's role is to ensure that it has in place a comprehensive telecommunications regulatory regime which contains safeguards in relation to service to customers and measures to ensure that consumers gain the benefits of an open competitive market. The regime the Government currently has in place provides regulation that is transparent and applies to all industry players, not just the one that is Government-owned. The regime also provides greater certainty to the Australian community that its interests are clearly established in law.

In summary, the Government does not need to own Telstra to achieve the desired outcomes for society and consumers. In fact, contemporary experience indicates that government pursuit of competitive and consumer benefits can be hindered by ownership responsibilities and obligations.

Major provisions of the Bill

The legislative package will continue to provide a world class consumer protection framework. The Government recognises that, while competition will, in most cases, provide a good outcome for consumers, there is a need for safety nets to ensure that in all cases consumers have a guarantee of certain basic levels of service.

I now turn to the major provisions of this bill.

The Telecommunications (Consumer Protection and Service Standards Bill 1998 brings together the consumer protection measures that were contained in the Telecommunications Act 1997 to provide greater visibility and clarity. It is essentially a transparency measure drawing together the full range of consumer safeguards in a single bill making it easier for consumers to access information about their rights. It does not diminish the substance of any of these obligations and indeed, some minor amendments and additions are proposed which clarify and enhance certain existing provisions.

At the core of the community obligations of the telecommunications industry is the universal service obligation (USO). The Government continues to be firmly committed to maintaining a general obligation on the industry to ensure that all people in Australia have reasonable access to the standard telephone service (including customer equipment), payphones, and prescribed additional carriage services on an equitable basis, wherever they reside or carry on business—and a supporting obligation to supply those services on request. The universal service provisions in this bill maintain those protections previously provided in the Telecommunications Act 1997.

The measures currently included in the Telecommunications Act 1997 to be incorporated into this bill are those relating to:

. the universal service regime and the national relay service (including funding provisions);

. the right to continued access to untimed local voice calls for business, charity and residential customers, and the right to untimed data calls for residential and charity customers;

. the Customer Service Guarantee (CSG) which ensures that phone users are compensated for inadequate service;

. protection for residential consumers against failure of service providers to provide services;

. provision of direct access, free of charge, to emergency call services;

. the Telecommunications Industry Ombudsman Scheme (TIO) for investigation of service complaints; and

. the price control arrangements on Telstra to ensure that the benefits of competition and technological change are shared by all Australians.

The bill also includes amendments to some of these provisions to strengthen them. In addition, it includes a new provision giving the Minister the power to direct Telstra in relation to matters contained in this bill.

An amendment will give the Australian Communications Authority (ACA) the power to direct a telephone company to redress systemic problems in relation to the Customer Service Guarantee. This will enable the ACA to look proactively into systemic problems (eg consistent faults in a certain geographic area) and direct a carriage service provider about the things it should do to ensure those problems do not recur.

The objective of the proposed amendment is to provide a substantial incentive to the carriage service providers to identify and solve recurring problems which have resulted in their not being able to meet the CSG Standards on a regular basis. The threat of a substantial fine, up to $10 million for failure to comply with an ACA direction, will place a significant incentive on the carriage service provider concerned to improve its performance.

The bill continues the existing obligation that all carriage service providers must enter into the Telecommunications Industry Ombudsman (TIO) scheme. A minor amendment is intended to remove any perceived ambiguity in the Telecommunications Act 1997 and ensure that there is only one TIO scheme.

In addition to the retention of the price controls currently incorporated in the Telstra Corporation Act 1991 applying to Telstra there are two minor amendments to the price control arrangements. These amendments are the insertion of:

. a provision making it clear that Telstra-specific price cap arrangements and other price control arrangements may relate to charges for untimed local calls in particular areas; and

. a provision making it clear that Telstra must comply with any determination setting out price control arrangements.

There is also an amendment to the Trade Practices Act 1974 making it explicit that the Australian Competition and Consumer Commission (ACCC) is responsible for monitoring and reporting each financial year to the Minister for Communications, Information Technology and the Arts on Telstra's compliance with its price control arrangements, and the Universal Service Provider's (USP) compliance with any price controls in relation to the provision of the universal service.

These amendments will reduce regulatory uncertainty and provide Telstra and any other USPs in the future with appropriate incentives to comply with the price control arrangements.

The price cap arrangements are currently under review. However, the Government has indicated that price controls will continue.

This bill contains a new provision which provides that the Minister may direct Telstra to comply with this new consumer act. This will provide a targeted Ministerial power of direction over Telstra that relates specifically to the safeguards in the Telecommunications (Consumer Protection and Service Standards) Bill 1998. It is a specific power of direction which will address community concerns by targeting the service standards and consumer safeguards which are clearly related to the Minister's regulatory responsibilities and in no way related to ownership. This provision adds to the existing powers of the regulators to seek compli ance and further strengthens the consumer safeguards regime.


The NRS Levy Imposition Act 1998 imposes a levy on participating telecommunications carriers which is used to fund the National Relay Service.

This bill amends the NRS Levy Imposition Act to replace a reference to a provision of the Telecommunications Act 1997 with a reference to the corresponding provision of the Telecommunications (Consumer Protection and Service Standards) Act 1998 consequential upon the enactment of that act.

Debate (on motion by Senator Quirke) adjourned.