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Tuesday, 7 February 2012
Page: 104

Mr BUCHHOLZ (Wright) (20:53): I rise to speak on the Telecommunications Universal Service Management Agency Bill 2011. The universal service obligation is a vital aspect of Australia's telecommunications system. Every Australian, regardless of where they live, needs and deserves access to basic telephone services at a reasonable price. The USO supposedly guarantees that these services will always be available.

Primarily, the USO is designed for residents in regional and remote Australia. My electorate of Wright is in the western hinterland of the Gold Coast and travels through to the top of the Toowoomba Range. It is predominantly a horticultural and agricultural precinct and definitely falls into the regional, and in parts remote, area of Australia. For people in regional and remote Australia, access to basic phone services is vital because other communication options are frequently either not affordable or completely unavailable. Obviously, in regional and remote parts of the country the provision of basic phone services, including payphones, is not economically viable so some sort of subsidy is necessary to ensure they are made available. Payphones are particularly important in remote towns where mobile coverage may be patchy or altogether non-existent.

Whereas previously Telstra's position as the monopoly operator of fixed line phone services meant they had a regulatory obligation to ensure that all Australians had access to a standard service, the rollout of the NBN and the structural separation of Telstra means there is a need to reform the USO system. Moving from a regulatory system to a contractual system should, we are told, result in competition which will provide benefits to consumers in the long term. However, as with most policies of the current government, the devil is lurking in the detail. While the USO will technically be open to competition, the government has already signed long-term contracts with Telstra as part of its backroom deal to prop up the NBN.

Of course, these contracts are not publicly available so we are expected to take the government's word that these contracts offer value for money both to the taxpayer and to telecommunications customers. When we talk about taking the government at its word, we need not look too far back into the political history books: 'I am not going to challenge the Prime Minister for the leadership,' 'There will be no carbon tax under the government I lead,' and 'Sure thing, member for Denison, we will have poker machine reform by May.'

The primary function of the legislation before us today is the creation of the Telecommunications Universal Service Management Agency, which will be responsible for entering into contracts on behalf of the Commonwealth for the delivery of public interest telecommunications services including standard services, payphones, the emergency call system and the National Relay Service. TUSMA will also be responsible for ensuring 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 public interest services like traffic lights, and public alarm systems can migrate onto the NBN with minimal disruption, we are told.

Under the new arrangements TUSMA will receive government funding, with residual funding requirements met by a consolidated industry levy which combines the current USO and National Relay Service levies. The government expects TUSMA's annual costs to be around $340 million—almost double the amount Telstra received in 2010-11 to provide standard phone and payphone services.

The second bill before the House is the Telecommunications Legislation Amendment (Universal Service Reform) Bill which will make consequential amendments to telecommunications and other legislation related to the introduction of the TUSMA Bill. The final bill before the House is the Telecommunications (Industry Levy) Bill, which covers the procedures by which the levy is imposed on telecommunications carriers to support the operations of TUSMA.

At present the Australian Communications and Media Authority oversees the USO and collects the USO levies. This system has worked reasonably well for a number of years. However, instead of utilising this existing infrastructure, the government has decided to create an entirely new bureaucracy with a new detachment of public servants. Is anyone surprised, given that I believe the federal bureaucracy has swollen by in excess of 22,000 personnel since 2007?

This new agency will have little incentive to keep expenses down, particularly as the government funding for TUSMA is fixed and any increase in costs will be borne by the telecommunications industry. Because any increase in TUSMA's costs will flow through to the industry levy, and ultimately to consumers, it is vital that TUSMA be kept efficient. That is why the coalition supports an amendment requiring ACMA's budget for a given year to be reduced by an amount equivalent to the administrative budget of TUSMA. This is to prevent overlap and duplication of costs within the two separate agencies. Furthermore, we believe the minister should be required to obtain a favourable independent review of the quality of standard services in regional areas before any potential roll-back of USO regulations can be considered. We are also concerned about the possibility of TUSMA's responsibilities being increased as part of an accounting trick to remove a few zeroes from the federal budget. At the moment, the government has committed to funding TUSMA to the tune of $100 million per year, with the budgetary shortfall to be made up by the industry levy. This creates a direct incentive for the government to shift more responsibilities on to TUSMA in the guise of public interest telecommunication services, thereby shifting the cost burden off the budget and on to industry and ultimately on to consumers.

It is also important to consider this legislation in its context. These bills would not be necessary if the government was not building the massively overcapitalised National Broadband Network. The TUSMA system was created as part of the government's backroom deal with Telstra to prop up the NBN—and propping up is exactly what the NBN is going to need.

A recent paper by telecommunications analyst Ian Martin revealed that the NBN will have to increase revenue per customer by 5.7 per cent per year if it is to have a hope of achieving its corporate plan. This is particularly incredible when you consider just how anticompetitive the NBN really is. The NBN is so desperate to stamp out competition, they did not even bother to analyse the financial impact if Telstra's existing HFC network continued to deliver fast broadband. Instead they simply ponied up the $11 billion and then insisted Telstra shut down the rival service. Australia should be fundamentally concerned with that. But, when it comes to the NBN, it appears antitrust is the order of the day. As economics professors Joshua Gans and Jerry Hausman said in a submission to the ACCC:

We can conceive of no greater anti-competitive action than the largest mobile service provider agreeing not to compete against the monopoly fixed line provider. The result will be less innovation, higher prices and less choice for Australian consumers.

Yet, despite having the deck massively stacked in their favour, the NBN is still going to have to increase its prices by roughly six per cent each year just to reach its targets. The government wants to talk about its economic credibility, but this is as good as it gets. Perhaps that is because the cost of the NBN is higher than any other similar project anywhere in the world. A study by The Economist found its price tag was 2.5 times higher than any telecommunications industry revenues and actually comprised 6.3 per cent of budget revenues. Even the Greeks in the state that they are in only committed 2.5 per cent of budget revenues to broadband.

Meanwhile, the NBN is hiring and paying new staff but is not receiving any income from customers. In its 2010-11 annual report, it was confirmed that 531 new employers had been hired on annual salary packages of more than $220,000. That is more than you get, Jonesie. The NBN has nine top executives who were paid a total of $8.5 million, with some receiving pay rises of 20 per cent, despite internal chaos caused by top construction managers quitting midyear and a major management reshuffle in August. Meanwhile, the NBN is producing no revenue from customers. Every cent of its revenue in the 2010-11 reporting period came from interest on the $1.4 billion taxpayers have forked out so far.

What has all this money paid for after four years? How far along have we got? A best guess is that approximately 3,000 households have now got faster broadband. But do not worry—soon there will be no choice thanks to the deal the government has done with Telstra and Optus and you will have to sign up to the NBN. If you want broadband there is not much competition or efficiency. It is my sincere hope that the Telecommunications Universal Service Management Agency is not beset by similar levels of waste and mismanagement that continually plague Labor governments, who are void of policy, direction and economic credibility. We in the coalition support the intention of this bill; however, we have grave concerns about the aspects outlined.