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Monday, 22 November 2010
Page: 1789


Senator BACK (5:49 PM) —This is an incredibly important issue. It is one that should not be lost on the Australian community. Should it be successful it will be one of the greatest expenditures, if not the greatest, in terms of infrastructure in this country’s history. I think what we are actually seeing is a very, very severe abuse of process. This Prime Minister came to the parliament and she came into government and she was promising a new era of transparency. This was to be letting in the light. I went back and had a look at the bible for this place—Odgers. In the first chapter, ‘The Senate and its constitutional role’, I was frightened by what I read.

The functions of the Australian Senate may be summarised as follows:

I will quote some of them, if I may.

(1) As an essential of federalism, to ensure adequate representation of the people of all the states ...

                …            …            …

(4) To review legislative and other proposals initiated in the House of Representatives, and to ensure proper consideration of all legislation.

That is what we are tasked to do.

(5) To ensure that legislative measures are exposed to the considered views of the community and to provide opportunity for contentious legislation to be subject to electoral scrutiny. ...

(6) To provide protection against a government ... introducing extreme measures for which it does not have broad community support.

Nor a mandate.

(7) To provide adequate scrutiny of financial measures, especially by committees ...

                …            …            …

(9) To probe and check the administration of the laws, to keep itself—

the Senate—

and the public informed, and to insist on ministerial accountability for the government’s administration.

I have asked myself during the debate this year to what extent we, as senators, can look at these principles and satisfy ourselves, the electorate and the wider Australian community that we have discharged our responsibilities. The reality is that we have not. How does this stack up in only the events of the last few days in which some senators, but not all, have selectively been offered briefings on condition, as the previous speaker said, that they sign up to secrecy agreements? Where does that fit into ensuring legislative measures are exposed to the considered views of the community? We now know the Greens have selectively been given advice and have made their decisions, and during question time in this place today we had the responsible minister, the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, say to Senator Birmingham, ‘You will not be included in the opportunity to be briefed in advance on this legislation.’

We have in this place an abuse of process and it is one, as 76, we should loudly be dissatisfied about. In March of this year, when I spoke to this bill as a person who has spent probably the last 30 years owning and operating businesses and as a chief executive of government agencies, I said that anything of this nature starts with the development of a properly structured business plan, only to be laughed at by the minister, who proudly said he could spend $46 billion of taxpayers’ money without a business plan. That was on 10 and 11 March. Apparently, we now have a business plan, some elements of which may or may not be available for scrutiny by the Senate, a selection of some of our peers and colleagues, subject to signing secrecy agreements, being told that they might be able to look at bits of it and a minister who says that upon the writings of the Chief Executive of NBN Co., appointed by himself without any formal selection or advertising process, we are all supposed to accept the legislation and pass it. I say again that this is an abuse of process.

One of the elements that I referred to in the development of a business plan on that occasion was a cost-benefit analysis. We asked who else had indicated the need for such an analysis. None other than the Secretary of Treasury, Dr Henry, who said in September 2009:

Government spending that does not pass an appropriately defined cost benefit test necessarily detracts from Australia’s wellbeing.

That was the senior official of Treasury calling for a cost-benefit analysis. A regulatory economics expert, Henry Ergas, said at the time that taxpayers deserve better. He said:

This is hardly public policy as it should be; nor is it structural reform. Rather it is legislated blackmail. The legislation’s very vagueness makes it clear what the government seeks is not a mandate for clearly defined change but an open-ended discretion to inflict massive costs … most immediately on Telstra and its shareholders.

He could well extend that to the wider Australian community. We have asked that the Productivity Commission be tasked to do an independent economic analysis of this biggest ever infrastructure program in our history. But no, we have been told the Productivity Commission does not need to do that—that we do not need an economic analysis or a cost-benefit analysis—yet we seem to have been asked to take on trust legislation which is deeply flawed.

What are the objectives of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010? The first objective is that Telstra is required to ‘voluntarily’ structurally separate its network and retail businesses. If it does not, the bill penalises Telstra by potentially barring it from 4G spectrum auctions and compels the sale of its HFC cable network and/or its 50 per cent interest in Foxtel. This is not some South American quango or some Eastern bloc communist dominated country; this is the democratic country of Australia. Telstra is a public company with two million shareholders. It has 50,000 or 60,000 employees and it provides services to 17 million people in this country and beyond our shores. The threat is that if it does not then it will be penalised, barring it from 4G spectrum auctions and/or losing 50 per cent of its interest in Foxtel.

The second key objective of the bill—and it causes you to wonder where we are—exempts the proposed NBN Co.-Telstra agreement from the normal operation of the Competition and Consumer Act 2010: ‘Don’t do as I say, don’t do as I do.’ This is an exemption from scrutiny which is visited upon every other public entity, company, in this country. The third objective is to amend the telecommunications access regime to a new approach where the ACCC sets upfront price and non-price terms for periods of up to three to five years. This would shift litigation, reduce the risk of litigation and increase certainty for access seekers. Who else gets this level of benefit economically? Nobody. The fourth objective of the bill is to enlarge consumer protections, including universal service obligations. We should be tearing the walls of this place down when we contemplate what this legislation actually intends to do.

I ask then the question: what has been the response from people in the industry? The past Chairman of the ACCC, Allan Fels, said:

One must have a real concern that the outcome of negotiations between Telstra and the government is that there will be a monopoly National Broadband Network with Telstra and other major telco players all involved but with little competition from anyone else.

All of us know the enormous international competitiveness in the telecommunications world. We can all link up on Skype. We can link up offices around the world and have a one- or two-hour conversation—as indeed I did in the company that I ran prior to coming into this place, where we would have conferences free of charge through internet conductivity with Dubai, Mumbai, Singapore, Kuala Lumpur and Perth. Why would we create a monopoly when there is such competitiveness in telecommunications around the world?

I wish to raise another point, and it relates to the fact that we are of course for improved broadband conductivity; everybody is for improved broadband connectivity, just not this plan. I use the analogy of water reticulation. What are we contemplating here in Australia? We are contemplating a $43 billion project to ‘make the reticulation pipelines around our property bigger and bigger and bigger’—and, you would think, faster and faster and faster. But, as has been pointed out to me by telecommunications experts, we are doing nothing with this expenditure or this legislation to actually increase the diameter of the pipeline internationally. Ninety-five per cent of all our internet connectivity is outside Australia; only five per cent is within Australia. To take my analogy further, if all you have is an 18 millimetre pipeline from the main into your home, the width of the pipes within your property does not matter a toss; you will be limited in your connectivity, you will be limited in the supply, by the diameter of that pipeline—and none of this legislation is directed at improving the quality, the timeliness, the size or the capacity of that pipeline joining us to the outside world. This is effectively a $43 billion intranet, if you take Australia as the one entity. There is no sense in increasing it to 100 megabits or anything else if you cannot increase the connectivity to the 95 per cent of the world where you actually connect into the internet.

I now come to what it is that must be changed. The first thing we must do to preserve Australia’s integrity in the wider business world, including the international business world, is ensure the normal operation of our competition and consumer legislation, which protects the interests of consumers and also promotes competition—and that must apply to the Telstra-NBN Co. deal, however it is structured. Only today have we learnt that, as a result of intervention and dominance by the Greens, the whole ball park has changed in terms of the future ownership of NBN Co. When we rose on Thursday, according to the minister, the NBN Co. was ultimately to be sold. We now know that, as a result of dominance by the Greens Party, the NBN Co. is to remain in public hands—yet another monopoly. Back to Communist Russia!

The second thing we must do is ensure that the ACCC has the capacity to properly review all aspects associated with this legislation, and it must have the long-term interests of all users—consumers, competitors and the parliament—in mind. If we are to regain the parliament’s control over this minister, it is essential that any ministerial direction to the ACCC must come under the umbrella of, and have joined to it, a disallowable instrument. When it comes to spectrum, since we have already seen that one of the objectives of the bill is to penalise Telstra should they not comply with the government’s demands, we must remove the minister’s gun to the head of Telstra and take away his discretion to bar Telstra from bidding for the next generation 4G wireless spectrum—and, again, we must achieve that through a disallowable instrument. We have got to remove that situation and we have to ensure that the private sector has equal opportunity to participate in this activity into the future.

As part of that process, when I spoke in March, as there was not at that time any intention to develop a business plan for this particular project, I considered what might be involved in a risk analysis. What is at risk? The first thing at risk is the incredible sum of money. As indicated by Senator Joyce in his contribution to this debate, it is not taxpayers’ money, it is loan money; it is money that has to be borrowed and repaid. If we do not get a hold of a business plan and a cost-benefit analysis we will never be able to scrutinise just how those funds are to be repaid. But what of the Telstra shareholders? Last Friday the Telstra share price was down to, I think, $2.66, which is near the year’s low of $2.60. So the first thing that is at risk is the debt to the Australian taxpayer and the erosion of the value of Telstra shares.

The second—which I have referred to and will repeat—is the integrity of Australia’s competition laws, the very laws that have held us in good stead and allowed us to be internationally favoured as a country in which to do business. Only over the last five to six months have we seen Australia’s sovereign reputation torn asunder by foolishly prepared, hastily announced mining taxes. Those taxes had to be withdrawn, but do not for one minute overlook the impact they had in Europe, the United States and Asia on the reputation of this country for safety and integrity. As I continue my presentation this afternoon, what is also at risk is the integrity of this chamber and its ability to scrutinise legislation according to that with which it is charged. If we abrogate that responsibility, if we pass that responsibility up, we will be damned—we will be harshly judged, as we should be, by the wider community, who place that trust in us.

We are looking at another monopoly. We are looking at public ownership well into the future. If we believe the Greens—and a deal has now been done between the Labor government and the Greens—we are facing lack of competition and abuse of parliamentary scrutiny. On the part of this minister, we are facing gross incompetence and arrogance. We saw that evidenced—and in fact supported by the minister’s own colleagues—during question time today, when question after question that would normally have gone to this minister was deliberately presented to ministers other than him. What sort of confidence does he enjoy amongst his own colleagues? He certainly enjoys none on this side of the chamber. In terms of his arrogance, I would refer to bullying, and if anybody doubts that they can simply look at the terms to which Telstra would have to agree—not a bad deal for Telstra but one that we would prefer not to have seen.

Finally, it is the effort of a government trying to retain power in this country at whatever cost—and it is a cost to the taxpayer.