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Thursday, 18 November 2004
Page: 67


Senator MOORE (2:24 PM) —My question is to Senator Coonan, the Minister for Communications, Information Technology and the Arts. Can the minister confirm that since January 2000 Telstra's standard line rental charges have risen from $11.65 per month to between $26.95 and $29.95 per month? Is the minister aware that, in its recent draft report on Telstra's price control arrangements, the Australian Competition and Consumer Commission stated that it was `particularly concerned about future price increases for line rental' and recommended that line rental prices should be subject to an `additional form of price control'? Can the minister give a commitment to the full implementation of the ACCC's recommendations for tougher price controls to prevent Telstra from using its market power to rip off us, the consumers?


Senator COONAN (Minister for Communications, Information Technology and the Arts) —I thank the senator for the question. Telstra's ability to raise line rentals is, of course, constrained by price controls imposed on it by this government. We built the consumer safeguards around telecommunications, and we are going to maintain them. The government impose retail price controls on Telstra in order to drive efficiency improvements to lower overall prices for consumers in markets where competition is not yet fully developed. Within these constraints, Telstra—like any other company—may vary its prices as it considers appropriate, but it is subject to a cap.

Telstra's compliance with the price controls is assessed annually by the ACCC. A breach of the price controls is a breach of Telstra's licence condition and can be penalised by a $10 million fine. The government has accepted ACCC and Productivity Commission advice that gradually increasing line rental charges to reflect the costs of providing phone lines is in the long-term interests of consumers, and the government is very conscious of the need to protect low-income consumers from the impact of line rental increases. To protect low-income consumers, the government has imposed a licence condition on Telstra requiring it to offer a $170 million annual package of assistance measures for low-income consumers. This package of measures is assessed by the Low-Income Measures Assessment Committee, LIMAC, that is made up of representatives from peak welfare bodies. So I am pleased to be able to tell the Senate that LIMAC's assessment of this low-income protection arrangement is that Telstra has responded genuinely and comprehensively to the licence requirement to provide a program assisting low-income Australians to access telecommunications services. And, looking to the future, the government has directed the ACCC to review the existing price control arrangements. Once the ACCC has reported in final form, the government will consider its advice and put in place an appropriate arrangement for price controls for Telstra by 30 June 2005.

But the problem, of course, with Labor's approach to this issue is that you would completely stifle Telstra if you were going to freeze line rental charges. In fact, I think that was the policy that was put forward by the former spokesperson, Mr Tanner, without any plan at all as to how you would keep these controls frozen, whether it would be in perpetuity or how you would ever assess the situation. The government, of course, will be very carefully looking at the ACCC's recommendation. I say this to the opposition and I say this to anyone listening to the broadcast: the government take very seriously the need for a robust system of price caps. We built these guarantees for consumers, and we will maintain them.


Senator MOORE —Mr President, I ask a supplementary question. Does the minister accept that the ACCC's report convincingly demonstrates the inadequacy of the price control regime presided over by the Howard government and outlined by the minister in her response? In light of this report, will the government now focus on looking after consumers of telecommunications services rather than just boosting Telstra's profits to fatten it up for the necessary, as stated by the minister, privatisation?


Senator COONAN (Minister for Communications, Information Technology and the Arts) —As usual, that is an entire misrepresentation of what I said. What I have said, in fact, is that this government has built safeguards for consumers. We understand that it is important to have a robust system of consumer safeguards embodied in price caps and, of course, we will retain untimed local calls, as we have said consistently. In those circumstances, I will be closely considering the ACCC's final report with a view to putting new price control arrangements in place, as I said, before the current price controls expire in June 2005. The report is due to be delivered, I think, in January 2005.