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Thursday, 20 September 2001
Page: 27520

Senator ALLISON (1:30 PM) —I seek leave of the Senate to incorporate the bulk of my speech in this second reading debate.

Leave granted.

The speech read as follows—

This Bill amends Part 11C of the Trade Practices Act 1974, dealing with arbitration of disputes between carriers and access seekers over access to certain telecommunications services. It seeks to encourage parties to settle access conditions by negotiation rather than arbitration and to reduce delays in the arbitration process.

Part 11C was inserted into the Trade Practices Act in 1997 and commenced operation on 1 July 1997, at the same time as the telecommunications industry was deregulated.

The intention was to allow for competition in the provision of telecommunications services. Of course, Telstra and previously Telecom has always owned the infrastructure that runs to literally millions of homes and businesses in this country and it was never seriously contemplated that new carriers would all install their own infrastructure.

Part 11C was enacted to provide a regime through which new carriers could get access to Telstra's lines into those homes and businesses.

Essentially that Part allows the ACCC to determine services to be `declared services'. After a service has been declared, carriers who provide that service must give other carriage service providers access to the service.

Since the inception of the regime, the contentious issue has always been, not surprisingly, the terms and conditions on which that access is provided. Most notably, the issue of price has been the major problem.

Part 11C provides 3 alternative means of setting the conditions of access: negotiated agreement between the parties, offering an access undertaking and arbitration by the ACCC. In the first instance, it is hoped that the parties will be able to agree on the terms and conditions of access to the services. Alternatively an access provider may offer an access undertaking. The ACCC must assess this undertaking to ensure it is consistent with model terms and conditions set out in the telecommunications access code or be reasonable and be consistent with the standard access obligations. Only four undertakings have been submitted to the ACCC, all by Telstra. They were all rejected because one or more of the conditions was considered unreasonable.

Ultimately, if the parties can't negotiate an agreement and if there is no undertaking in place for granting access, the terms and conditions must be determined by the ACCC in arbitrating an access dispute.

After the ACCC has arbitrated a dispute and determined the terms and conditions of access, it is open to either of the parties to the dispute to seek merits review of the determination by the Australian Competition Tribunal.

In June 2000, the Productivity Commission was given a reference to inquire into telecommunications-specific competition regulation. One of the key matters it was to inquire into was the access regime contained in Part 11C.

In its draft report, the Productivity Commission estimates that in a clear majority of cases, at least 80%, terms and conditions for access to declared services are able to be agreed by negotiation between the parties. However, negotiations have in many cases been difficult and protracted, and have resulted in delays in obtaining access to the services.

The major problem with the regime is that, quite simply, it is slow. It takes the parties a long time to negotiate - it takes a long term to have services declared - it takes a long time for the ACCC to determine that it will not accept undertakings - it takes a long time for the ACCC to arbitrate disputes.

Some of the submitters to the Committee inquiry into this Bill were of the view that the delays were largely the result of Telstra's actions. The suggestion was that Telstra has used every possible legal avenue available to it to avoid disclosure of information and to generally delay the process of negotiation and arbitration.

I make no judgments as to whether or not those criticisms are fair. However, it must be remembered that Telstra is a `for-profit' organisation responsible to its shareholders and if it can legally pursue a course of action to benefit its shareholders, then it will. It was interesting to hear a representative of a non-Telstra carrier criticise Telstra's behaviour but then admit that if he worked for Telstra, he would advise them to pursue the same course of action.

Rather than directing criticism toward Telstra and saying that Telstra isn't behaving fairly, I think we should be looking at the legislation and the actions and powers of the regulator, the ACCC, to rectify the situation if we think they are currently producing or allowing unfair conduct.

I am pleased that the Productivity Commission has reviewed Part 11C. I hope that its recommendations will balance the need to expedite processes in relation to the declaration of services and the determination of terms and conditions with the need to preserve the rights of Telstra to seek review of administrative decisions which affect it.

I will refer to just one specific issue raised by the submitters to the inquiry into the Bill. A number of witnesses thought that the right to obtain a review of the ACCC's arbitration by the Australian Competition Tribunal, should be abolished. A number of very cogent reasons were presented in favour of abolition of that right of appeal. The Committee in its report neither agreed nor disagreed with the proposal but said that the appropriate course was to await the findings of the Productivity Commission.

I wish to make it clear that the Democrats support that position. The abolition of any appeal right, especially one which relates to an administrative decision of a regulatory body, is a very serious matter. The Democrats don't have a predetermined position on the issue. However, we will require clear evidence if it is going to be the case that a single regulatory body will have the final say in arbitrations and the merit of that body's decision won't be subject to review.

Senator ALLISON —I would like to make some comments about the ALP second reading amendment. Part (a) says:

... the Senate

(a) notes the lack of effective competition in significant parts of the Australian telecommunications industry ...

The Democrats support that paragraph. We still do not have significant and genuine competition in the local call market and we certainly do not have competition of any degree in most parts of regional and rural Australia. I know that there have been moves to implement competition, or to at least trial competition, in the provision of USOs, but that too seems to have stalled. Perhaps the minister could comment on how those USO pilot areas are going when he sums up in this debate.

Part (b) says:

... the Senate ...

(b) notes the Government's failure to respond in a timely manner to widespread industry concerns ...

The Democrats do not support that paragraph. The government has made some attempts in the past to finetune the processes for obtaining access to the telecommunications infrastructure. It has perhaps been a case of rearranging the deckchairs on the Titanic because, in general, the whole negotiation-arbitration process has been slow and arduous. Whether you attribute the delays to Telstra, the ACCC or the access seekers, or to the mere fact that arbitrating these disputes is very complex, I have not seen the ALP or anyone else for that matter put forward serious proposals to significantly speed up the process.

Part (c) says:

... the Senate ...

(c) notes that the cause of the Government's failure to act has been its ideological obsession with the full privatisation of Telstra ...

The Democrats do not support that paragraph. I agree that this government has an ideological obsession with the full privatisation of Telstra, but even if we agreed that there has been a failure to act in relation to the competition regime, I do not think that one relates to the other all that well. In my view, the government would be more likely to push for greater competition in pursuit of selling Telstra. The more competitors it can point to, the better it can say that the regulatory regime is working and the more it can advocate that there is no longer a need for government control of Telstra. We simply cannot see that it is correct to suggest that there is some causation between a desire to sell Telstra and dragging the chain on competition reforms.

Part (d) says:

... the Senate ...

(d) calls on the Government to urgently consider further reform as part of its response to the final report of the Productivity Commission's inquiry into the telecommunications competition regime due next month ...

Again, the Democrats do not support that paragraph. We think it is pretty meaningless. It simply calls on the government to urgently consider further reform; it does not indicate what sort of reforms or whether there should be a modification of the current processes or a complete overhaul of the regime. That Productivity Commission report is due to be handed to the Treasurer on the 22nd of this month, just a few days from now. We will shortly be going into an election and further reform will not realistically take place until early next year. With those comments in mind, I would like to move an amendment to Senator Bishop's second reading amendment. I move:

Omit paragraph (b), (c) and (d)

I have been advised informally that the Labor Party is not prepared to agree to our amendment. If that is the case and my amendment is defeated, I indicate to the Senate that the Australian Democrats will not support the unamended version of the ALP's second reading amendment.