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Monday, 15 November 2010
Page: 2268


Mr ALBANESE (Minister for Infrastructure and Transport) (6:51 PM) —in reply—I thank members for their significant contributions to the debate on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, which is so important to Australia’s current and future economic prosperity. Measures put forward in this bill were originally debated in the previous parliament. It is fair to say that they have been the subject of considerable discussion over the past year. The government has taken note of the many constructive comments provided and changes have been made to the legislation to address those of them that were worthy of support.

The NBN is a historic nation-building investment which will help transform the Australian economy and create the new businesses and jobs of the 21st century. This is a view shared by the OECD. The OECD concludes in its recently released economic survey of Australia that the NBN has the potential to yield substantial benefits, especially in terms of productivity, and that it will improve internet services for the entire Australian population. It also concludes that it will promote fairer competition between private firms on retail services.

Through the NBN the Gillard government is ensuring that every Australian, no matter where they live, has access to affordable high-speed broadband. The NBN will be a wholesale-only, open access network. It will introduce competition to the telecommunications market, and this will open up genuine choice of services and drive highly competitive prices for consumers, whether they live in a capital city or in rural and regional areas. This acknowledges that Australia has fallen further and further behind the rest of the world since the Liberals and their National coalition colleagues voted to privatise Telstra without any review and without ever putting in place the arrangements to properly protect competition and services in regional areas. It also acknowledges that current infrastructure based competition in Australia has failed. This is in light of the most recent OECD statistics which show that Australia is now ranked 17th out of 31 countries for fixed-broadband subscribers. Australians also pay more for broadband than most OECD countries. For average subscription prices, Australia is the fifth most expensive overall.

People across the country are crying out for faster, more affordable broadband and the Gillard Labor government is getting on with the process of delivering it. The rollout in Tasmania is progressing on time and under budget. On the mainland, in four of the first release sites NBN Co. has received requests to connect on average about 75 per cent of premises with a fibre connection. The government does not require a cost-benefit analysis to know that this is a piece of infrastructure that Australia needs. To do a formal cost-benefit analysis of the NBN would take many years, require many heroic assumptions and would tell us something we already know—that Australia needs greater investment in high-speed broadband infrastructure.

The implementation study confirms the NBN can be built on a financially viable basis with affordable prices for consumers. The government released this study in full on 6 May 2010. After eight months of detailed analysis, the implementation study confirmed that under a range of realistic scenarios NBN Co. will have a strong and viable business case. It also confirmed that the project can be expected to generate a return of six to seven per cent, and that the government could expect to generate a return on its investment to cover its cost of funds.

That said, during the rollout the existing telecommunications regulatory regime will remain important for delivering services in the interests of Australian consumers and businesses. The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 is designed to reshape that regime. The measures proposed will streamline the regulatory framework to enhance competition and better protect consumers. Structural reform of the industry will be implemented with the transition to the NBN in line with the government’s vision for a wholesale-only, open access network. Incentives will be created for Telstra and other telecommunications operators to transform the way they do business and to become more innovative and customer focused. These changes to the telecommunications access regime will underpin greater investment by giving all parties regulatory certainty. The bill will also safeguard consumers by strengthening the current universal service obligation, customer service guarantee and priority assistance arrangements.

On 20 June 2010 Telstra and NBN Co. announced that they had entered into a financial heads of agreement. That agreement provides for the progressive migration of customers from Telstra’s copper and pay TV cable networks to NBN Co’s new wholesale-only, fibre network as it is rolled out. This will deliver the ultimate structural reform of the telecommunications sector. This legislation will create a framework to deliver this important reform.

The coalition are putting forward a number of amendments to the legislation. It follows, of course, the 20 different broadband plans that they have had. First, they want to remove the provisions designed to exempt any agreement between Telstra and NBN Co. from the provisions of the Competition and Consumer Act on the grounds that they might allow anticompetitive outcomes. First and foremost, the opposition fail to acknowledge that the structural reform to be delivered is in the national interest. However, the ACCC will consider the competitive impacts of any agreement between Telstra and NBN Co. as part of its scrutiny of Telstra’s structural separation undertaking, or SSU. Any agreement will need to be reviewed in the context of considering the SSU that Telstra lodges with the ACCC in order for the SSU to be approved and the arrangements authorised. Once approval is given the agreement and associated conduct will be authorised for the purposes of trade practices law. This removes any need for separate authorisation inquiry, while still ensuring appropriate scrutiny of the arrangements. The bill relies on the authorisation provisions in section 51 of the Competition and Consumer Act. This is a well-established mechanism which has been used extensively by Australian governments. The ACCC website currently lists 80 separate pieces of Commonwealth, state and territory legislation where section 51 authorisations are in use.

Secondly, the opposition proposes that certain ministerial instruments be subject to disallowance by parliament. The government’s strong view is that these instruments should not be disallowable as the risk of disallowance would cause uncertainty for Telstra. The bill requires that certain instruments must be in place to permit Telstra to lodge its SSU with the ACCC. Disallowance would threaten this outcome and could have the perverse effect of forcing Telstra to undertake functional separation even when its preferred option is structural separation.

Thirdly, the opposition calls for the removal of the so-called guns to Telstra’s head by denying it wireless spectrum and forcing it to divest its interests in Foxtel unless it voluntarily agrees to separate. These so-called provisions have been removed. There is no longer an automatic prohibition on the acquisition of spectrum if Telstra does not structurally separate and divest its interests in its cable network and Foxtel. The bill has been amended to give Telstra sufficient regulatory certainty to take a firm proposal to its shareholders to structurally separate by allowing Telstra to acquire specified bands of spectrum, unless the minister determines otherwise in a legislative instrument. The bill does not require Telstra to divest its interests in Foxtel but still provides a framework for Telstra to voluntarily divest its interests in Foxtel and its hybrid fibre-coaxial cable network. In the event that Telstra does not proceed with structural separation, the minister could take into account Telstra’s ownership of Foxtel and its cable network in determining whether to use the powers in the bill to prevent Telstra from acquiring certain spectrum to address Telstra’s power in telecommunications markets.

Fourthly, the opposition want to subject ACCC decisions to merits review. This is despite the fact that in 2002, when they were in government, they repealed merits review for ACCC arbitration determinations because it was hindering the development of competition. It is the government’s view that the notional accountability benefits of merits review within the current system are strongly outweighed by the delays, the regulatory uncertainty and the outright gaming that have occurred. Furthermore, it is an inappropriate provision. Under paragraph 4.53 of the Administrative Review Council guidelines about what kinds of administrative decisions are suitable for merits review, decisions which involve extensive public inquiries or consultations are not suitable for merits review. ACCC access determinations which involve extensive public consultation fall into this category. Omitting merits review from the proposed arrangements reflects a majority of industry submissions on how best to improve the telecommunications access regime, and this aspect was almost universally welcomed by non-Telstra industry participants when the original bill was introduced last year. If the ACCC makes an error of law or process when it makes an access determination, any party affected by the decision will be able to apply to the Federal Court for judicial review of the decision just as they can now.

Finally, the opposition want to restore the requirement for procedural fairness. The requirement for the ACCC to accord procedural fairness will apply to all of the ACCC’s regulatory decisions under part XIC, except in relation to interim access determinations and binding rules of conduct. The salient point of introducing binding rules of conduct is to allow swift regulatory responses to urgent matters that may arise. According procedural fairness would inevitably delay such actions—hardly a desirable outcome in matters where speed is of the essence. In reality, procedural fairness will not be absent for long in this circumstance. Within 30 days after making binding rules of conduct, the ACCC will have to commence a public inquiry to vary the access determination or make a new access determination. Parties will be accorded procedural fairness in the public inquiry process. The opposition amendments are unnecessary and would serve only to complicate the proposed streamlining of the regulatory framework.

In conclusion, I once again thank members for their contributions to the debate on this bill. These wide-ranging reforms address problems across the whole Australian telecommunications sector and represent the most significant reforms to the telecommunications legislative framework since 1997. The task of undertaking such difficult but necessary reform in an industry that is fundamental to Australia’s long-term national interests is one which this government embraces wholeheartedly and one which the government encourages the parliament to embrace. The series of amendments put up by the opposition are once again an attempt by them to delay reform; it is to delay what is required to build a truly national broadband network that is suitable for the 21st century. We know that the National Broadband Network is absolutely vital to Australia’s economic future but also in providing social equity due to the revolution that can occur through access to telecommunications. The NBN is indeed a historic nation-building investment. I commend this bill to the House and urge the parliament to reject the amendments that have been put forward.


The DEPUTY SPEAKER (Mr KJ Thomson)—The question is that this bill be now read a second time. There being more than one voice calling for a division, in accordance with standing order 133(b) the division is deferred until 8 pm.

Debate adjourned.