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Wednesday, 8 February 2012
Page: 242

Mrs PRENTICE (Ryan) (12:10): It is important that we consider the bills before us today in context. We would not be debating these measures if the Gillard government were not embarking on the shambolic waste of money that is NBN Co. The whole Telecommunications Universal Service Management Agency system was created as part of the government's backroom deal with Telstra to prop up NBN Co. It is yet another flawed component of the entire fiasco that is NBN Co.

There are three bills before the House today. The first of these, the Telecommunications Universal Service Management Agency Bill 2011, provides the framework for the new USO system. The bill will create a new statutory agency called the Telecommunications Universal Service Management Agency, to be known as TUSMA. TUSMA will be responsible for entering into contracts on behalf of the Commonwealth for the delivery of public interest telecommunications services. These include standard telephone services, payphones, the emergency call system, and the National Relay Service. TUSMA will also be responsible for ensuring that voice-only customers are migrated onto the NBN fibre network before Telstra's copper network is decommissioned. TUSMA will also be required to support research and development aimed at ensuring that public interest services such as traffic lights and public alarm systems can migrate onto the National Broadband Network with minimal disruption.

Part 2 of the bill sets out the scope of grants and contracts to be administered by TUSMA and provides for the minister, subject to the scrutiny of parliament, to set the standards and benchmarks that will apply to contracts and grants managed by TUSMA. The agency will monitor the performance and compliance of contractors and grant recipients and will maintain a register of all contracts and grants. Part 3 sets out TUSMA's corporate structure, accountability, and reporting requirements.

The structure of TUSMA will be a statutory agency under the Financial Management and Accountability Act 1997. The minister will appoint a chairman and four to six members. In appointing TUSMA members, the minister is required to select candidates with a diverse range of skills and expertise, and TUSMA will also have a CEO and staff, who will be employed under the Public Service Act—even more bureaucracy and swelling of the Public Service.

The government has chosen to introduce yet another duplication of services as an attempted solution. At present, ACMA oversees the USO and collects the USO levy. This system has worked reasonably well for a number of years, yet instead of utilising the existing capacity within an existing agency, the government has seen fit to create a new bureaucracy with a new platoon of public servants. This new agency will have little incentive to keep expenses down, particularly as government funding for TUSMA is fixed, and any increase in costs will be borne by the telecommunications industry. Further, I have concerns about the associated costs of TUSMA. Under the new arrangements, TUSMA will receive government funding, with residual funding requirements to be met by a consolidated industry levy, which combines the current USO and NRS levies. The government has agreed to pay Telstra $230 million per year to provide standard telephone services and $40 million per year for payphones. Telstra will also be paid up to $20 million per year for the emergency call service.

As part of the government's agreement with Telstra, the emergency call service will be put to tender within five years, but if no tenders are received, or none of the tenders are acceptable to TUSMA, Telstra will continue to be the emergency call service provider. On top of this, the National Relay Service contracts currently cost about $17 million per year. The government estimates that TUSMA will also spend about $15 million per year on migrating voice-only customers to the NBN and $20 million over two years on developing solutions for the migration of public interest services to the National Broadband Network.

The government expects TUSMA's annual administrative costs to be approximately $5 million. This takes a total expected liability for TUSMA to about $340 million per year, reducing to $330 million after two years, including a component to cover the agency's administrative expenses. This is a significant increase in the cost of delivering the USO. By way of comparison, Telstra received a subsidy of about $145 million to deliver standard telephone services and payphones in 2010-11.

This increase in the subsidy provided to Telstra and the government's policy decision to expand the scope of services to be funded by the industry levy mean that telecommunications carriers will be asked to pay a significantly increased levy which, in turn, will be passed on to the consumer. After the initial two-year period, the government has committed to provide $100 million per year towards TUSMA's operations, with residual funding needs to be met entirely from the industry levy. Any increase in TUSMA's costs will flow through to the industry levy and ultimately to telecommunications consumers. Given this government's track record of poor and reckless financial management, there is little hope that costs will be contained.

The coalition has concerns over TUSMA, particularly for regional access. We are also committed to ensuring that Australians in regional areas will continue to have reliable access to standard telephone services. To that end, the shadow minister will move an amendment to require the minister to obtain a favourable independent review of the quality of standard telephone services before being permitted to roll back USO regulations. This provision will ensure that an independent expert certifies that standard telephone services are of sufficient quality to justify rolling back USO regulations.

This amendment will add an additional safety net within the Telecommunications (Consumer Protection and Service Standards) Act 1999 to ensure that the USO regulations are not rolled back too soon. The coalition also has concerns about the scope for TUSMA's responsibilities to expand without reasonable basis. The government has indicated that TUSMA's budget funding will be set at $100 million per year. The residual requirement will be funded by the industry levy. This creates an incentive for the government to shift further responsibilities onto TUSMA under the guise of public interest telecommunications services, while shifting the cost from the government's budget onto the industry and ultimately the long-suffering consumers.

They say that a week is a long time in politics—in the CIT industry we talk about nanoseconds. The rate of change and advances in technology and communication is breathtaking. We probably cannot imagine what innovations will be introduced in five years time, yet this agreement has a term of 20 years. In 20 years time there is a good chance that payphones will be obsolete, yet this government is committing us to a 20-year agreement. Given this government's track record across the board, the cost of TUSMA has the potential to be yet another financial nightmare, with the real losers being ordinary Australians.