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ABC News Breakfast -

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(generated from captions) The competition watchdog has

raised serious concerns about

Telstra's plan to separate its

wholesale and retail networks, an integral part of the Government's plans for the National broadband

network. Malcolm Turnbull is

the Opposition spokesman for

communication and he joins us

from Sydney. Good morning. Good

morning. How serious a touch up

is this from the ACCC to

Telstra in your view? I think

it's very serious. The NBN

Telstra deal is one that has

been put together by Senator

Conroy. He's cut corners, he

has abandoned all commitment to

competition in the tele

communications market all as

part of his desperate effort to

get the NBN project approved. I

mean consider this - for

decades, for generations in

fact, we have been committed to

ensuring there is a competitive

tele communications market,

we've been wanting to make the

market more competitive because

that's what delivers lower

prices and we've seen a massive

drop in Internet access prices

over the last 5, 10 years. What

this Government is doing, and

this is what the ACCC is

bucking or pushing back at,

what this Government is doing

is eliminating all competition.

Part of its deal requires

Telstra not to promote

broadband wireless as an

alternative to the NBN and also

prohibts Telstra and Optus for

that matter, from using their

HFC pay TV cable networks to

deliver broadband or voice

because if they were to do so

that would compete with the NBN

and require it to offer access

at lower prices. So what we're

seeing is a perversion of the

whole economic reform agenda

over several generations in

order to prop up the very shaky

economics of the NBN. OK, well

Telstra will now have to act.

They will have to reinsert

these conditions into the roll

out of the NBN. This in the end

will be a pretty short hiccup,

won't it and will get the NBN

rolling out as per schedule? I

don't know whether it will be a

short hiccup or not. You see

what the - the ACCC has raised

a lot of issues, I've mentioned

a couple, relating to wireless

and HFC. They've also sought to

have an unequivocal, over

arching commitment from Telstra

that it will provide e quif

lance of equal access in terms

of conditions, price and

everything else, to its copper

network, to other telcos as it

does to its own retail business

because you've got to remember

even if the NBN were to be completed on schedule, and

there is nobody in the industry

that believes it will be,

nobody that I'm aware of, in

fact it's running about 10

months behind already, but even

if it is completed on schedule

it won't be until after 2020

that it is complete. So you're

talking about a good decade of

Telstra still being the

dominant fixed line provider

and so what the Government

should have been doing is

seeking genuine equivalence of

access, they haven't done that.

They've done the deal that

enables them to get access to

Telstra's ducts and above all eliminates Telstra as a

competitor with the NBN on its

HFC network. The HFC network,

the pay TV network used to

deliver Foxtel, passes 30% of Australian households now. Now

it can and it does, particularly in Melbourne,

deliver broadband at very high

speeds, as high as those

nominated for the NBN. So to

eliminate it removes the

competitive pressure that would

keep the NBN affordable but

when you look at what the NBN

is saying they have gone to the

ACCC themselves and said we'll

keep the price of our lowest

speed product, the 12 meg bits

per second product flat for 5

years but for every other

product we deserve the right to

increase that price by CPI plus

5% every year for 30 years. Now

we've seen prices coming down

dramatically over the last 5

years, we're going to spend $50

billion plus of taxpayers'

money and what will we get in

return? A roton investment for

the taxpayer and for the

consumer prices going up again

because the NBN will have both

the incentive and as a monopoly

the means to charge higher and

higher prices. Telstra is

indicating it does plan to

proceed with a shareholder vote

in October to sign off on this

NBN deal, even though those

regulatory issues may be

unresolved. In your view should

Telstra put off that

shareholder vote? Well, look,

it is not uncommon for

companies to get shareholder

approval subject to regulatory

approval but what that means is

that whatever deal they put to

shareholders will have to be

the deal that gets approved or

not. So they limit their

flexibility enormously. So they

would have to have a bargain or

an arrangement that they are

basically giving the ACCC on a

risk they run if the take it or leave it basis. The

risk they run if the ACCC comes

back and says change this, this

and this, we're still not

happy, then they may have to go

back to shareholders. The belt

and braces approach, the most

conservative and cautious

approach would be to wait until

they had the ACCC approval

nailed down and then go to

shareholders and I think a lot

of that's - a lot of people

would be advising them to do

that but ultimately that's a

decision for the Telstra directors. OK, Malcolm Turnbull

, just a couple of other issues

before you go. You may have

seen your former boss, John

Howard on '7:30' last night

saying that one of the biggest

mistakes of the Rudd/Gillard

Government was, as he put it,

the reregulation of the labour

market. He said it would be up

to a Coalition government to

wind back that reregulation.

Surely from a Liberal

perspective he's stating the

bleeding obvious there, isn't

he? A penetrating glimpse of

the obvious indeed but

nonetheless insightful and

somebody's got to do it. Will

you be taking his advice as a

former prime minister on labour

market issues? We all take John's advice. He's very

respected and particularly on

that subject but what the

policy the Coalition takes to

the next election in terms of

labour market reform,

industrial relations matters is

something that will be decided

collectively. So I can't tell

you what the policy will be

here, that's something that

we've got to decide in the lead

up to the election. And I think

there's some merit in holding

fire for a little while longer

at least because when the fare

work reforms or changes by the

Rudd Government were put in

place, we said this would make

Australian industry less

productive, we said it would

increase costs for business, it

would ultimately not be good

for employment. Now, I believe

that our warnings have been

borne out by experience, others

may not be so convinced. So

let's live - we can't change

these reforms - these changes

from Opposition so we'll have a

bit more experience of them

between now and the next

election and then be in a much

better position both to frame

and indeed to advocate the

changes that will be necessary

to reintroduce a measure of

flexibility because you've got

to remember that Kevin Rudd's

reforms or changes turned the

clock back not just back past

Work Choices, but right back

and indeed rolled back reformed

that had been made by John

Howard in earlier times and

indeed by Paul Keating. So it

was a real roll back of

economic reform, of labour

market reform and the B NBN

point I was addressing earlier

is in the same vain. We're seeing this Government turning

back the process of economic

reform by many decades in a

range of areas. This is not a

Government of economic reform,

it's not a progressive

government at all. And just

quickly, the WikiLeaks cables

continue to be released. You,

as you probably would be aware

by now, got mentioned in

despatches in this latest

treasure trove of documents.

They relate to US consular officials relating

conversations with senior

Liberals about the time you

were aspiring to the Liberal

Party leadership with those

Liberal MPs telling their US friends that they were

supporting you only to set you

up to fail. What do you think

about that? Well, you know,

it's gossip. There's plenty of

political gossip around and

that's some gossip that's been recorded in a diplomatic

cable. They're great colleagues

to have though, aren't they,

those sort of colleagues? Yes,

they're wonderful, they're

wonderful. I'm very lucky to

have them. Everyone. So is the Malcolm Turnbull leadership

baton firmly back in the

Malcolm Turnbull knapsack? The

journalistic desire to get me to say something about

leadership has not lost - not

left your knapsack, that's for

sure. So no, I will let that - I'll kick that ball into the

long grass, if you don't mind. OK, well I'll leave that

analogy there. But just quickly

on one quick issue before you

go, what do you make of this

seemingly increasingly ugly mud

fight we're seeing in full

public display this morning

between News Limited and the

Gillard Government? The Prime

Minister very unhappy about a

column in Monday's edition of

the 'Australian', the

'Financial Review' this morning

reports the Gillard cabinet is

meeting to qur going to war

against News Limited? Well, I mean I don't know whether

that's true or not but I think

there are bigger issues to say

the least, bigger issues for

the Gillard Government to

address than fights between the

Prime Minister and newspapers.

Relations between politicians

and the media are always

scratchy, it's probably a good

thing that they are. Sometimes

the politicians are

unreasonably sensitive,

sometimes newspaper, indeed

even the ABC, go over the top

in their criticism and are are

unfair. So it's a constant

friction but really there are

so many big economic issues

facing Australia today. We are

facing - we are in the midst of

an unprecedented mining boom.

Why are we not saving more of

the boom? What are we going to

have to show for the boom when

it ends as it most assuredly

will? What are we going to do

about industries both not just

manufacturing but service

industries as well, service

sectors as well, that are being

damaged very seriously by the

very high Australian dollar

that of course is being driven

up by the mining boom itself.

These are huge issues of

economic management and

adjustment and really if the

cabinet is spend ing more than

a few minutes over morning tea chatting

chatting about the Australian

they are really derelict in

their duty. They should be

focused about - they shouldn't

be worried about the next

election, they should be

worried about doing the job

they're entrust ed to by the

Parliament today which is

managing the Australian economy

and so far they've neglected

that. We've talked about how

they've rolled back economic

reform and industrial

relations, we've talked about

their extraordinary

mismanagement of the NBN which

is going to involve the expenditure just this year of

over $3 billion and what are we

going to show for it? Higher

prices is the ultimate outcome. All of that is what they should

be focused on getting the

economy right rather than Julia

Gillard's wounded feelings. OK,

Malcolm Turnbull, thank you

very much for that and thanks

for the picture of your dog.

We'll get to that later as part

of our dog debate this

morning. That is Mellie the dog

who has one eye and three legs

so she's a very resolute little