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Thursday, 27 May 2004
Page: 29394

Mr TANNER (3:19 PM) —My question is also to the Prime Minister and it relates to whether now is the time to be massively increasing the price of having a telephone in your home. I refer to statements by Telstra chief financial officer, John Stanhope, at Senate estimates that under the government's Telstra price control regime Telstra's massive line rental fee hikes will increase its revenue by $200 million in the next financial year and that reductions in call prices will only cost Telstra $20 million in reduced revenue. In view of Telstra's latest annual profit figure of around $3.4 billion, will the government now adopt Labor's plan to freeze line rental fees and require Telstra to give more money back in lower call prices so that Australian consumers are no longer ripped off?

Mr WILLIAMS (Minister for Communications, Information Technology and the Arts) —The first thing I point out to the member for Melbourne in relation to his question is that Telstra is a corporation under the Corporations Law. It operates under the board and the management.

Mr Tanner —And under your price control regime.

The SPEAKER —The member for Melbourne has asked his question.

Mr WILLIAMS —And it was the Labor Party who put it into that position. The government does impose retail price controls on Telstra, and the purposes of doing that are to drive efficiency improvements and to lower prices for end users in markets where competition is not yet fully developed.

Mr Tanner —It's not working well, is it?

Mr WILLIAMS —Within this constraint, this corporation may vary its prices as it considers appropriate. Telstra's compliance with the price control regime is assessed annually by the ACCC, and a breach of the licence condition can be penalised very heavily—in fact with a $10 million fine. One of the objectives of the price controls is to gradually remove the access deficit, as recommended by the ACCC and the Productivity Commission, in order to improve competition in telecommunications markets. To achieve this, Telstra is required to reduce a bundle of service prices by 4.5 per cent less CPI, and it is limited to increasing line rental controls by CPI plus four per cent.

Mr Tanner —Why have they gone up 13 per cent then?

The SPEAKER —The member for Melbourne on three occasions has been reminded of his obligations.

Mr WILLIAMS —The nub of the member for Melbourne's question suggests that line rental prices are affecting low-income consumers. There is in place a scheme under which Telstra provides assistance to low-income earners. One-hundred and seventy million dollars a year is provided for that purpose, and the administration of it is supervised by a committee—the Low-income Measures Assessment Committee—on which a range of consumer organisations are represented. We want to see effective competition in the telecommunications market. That is what will drive prices down. When the access deficit has been removed, that is what we will get.