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Thursday, 11 March 1999
Page: 2708


Senator MARK BISHOP (10:22 AM) —I want to make a few comments on the Telstra CoT cases report just tabled by the chairman of the committee, Senator Eggleston. The casualties of Telstra review process has been an exceptionally long process, kicking off originally, as I understand it, in 1994 and formally going to the relevant Senate committee in 1997, arising out of matters raised at estimates hearings that year. It is a fairly archetypal Australian story of a large corporation, a $100 billion corporation, fighting a number of individuals over a long period of time.

The casualties of Telecom, the CoT people as they call themselves, are a small group of business people who have alleged inadequacies and failure of phone service over a prolonged period of time, leading to a decline in their business relationships and eventually cash flow and loss of profit of a significant amount. They have alleged that when calling parties phone their business they received a ring tone but the receiving party received no indication of the call. As a consequence of that allegation, if correct, business was unable to be transmitted and conducted and the relevant persons lost opportunities.

The operators were, as I said, business people—single operators, husband and wife partnerships. There were originally some 16 or 17 persons involved in the dispute. Eleven of those matters have been settled over time and there are five outstanding matters that are either in a process of arbitration, in a process of review of a working party established by this Senate or, as I understand it, one or two of the parties are part way through legal processes in the Supreme Court of Victoria.

As I say, the five outstanding claimants essentially allege that poor or non-existent phone services by Telstra or its predecessor in various forms has led to loss of business. In trying to set down and resolve this matter through the working party process, they have experienced a range of problems. There has been a lack of availability of competent legal advisers around Australia, particularly along the eastern seaboard, to advise these persons because Telstra retains for its legal advice some 45 firms around Australia and along the eastern seaboard. There has necessarily been a huge imbalance of resources that Telstra on one side and the claimants on the other side are able to marshal to advocate their particular cause. The claimants have had lack of resource to a whole range of material of a scientific and technical nature.

In addition, Telstra and its advisers have claimed legal professional privilege on a number of occasions and there have been significant problems with freedom of information processes. In total, I suppose one would say that there has been a long period during which documents and materials have been sought to be discovered or to become available. Telstra, as within its rights, has pursued all necessary legal, technical and administrative processes and procedures to delay resolution of the matter.

In terms of obtaining documentation, a whole range of problems have been brought to the attention of the Senate committee—issues of cost, location, non-retention of documents over time, poor filing systems, loss of corporate memory as employees of Telstra leave the corporation, move to other businesses or simply do not recall matters that occurred or were filed or administered many years ago. The task has involved, we are informed, the release of some 200,000 separate documents—not 200,000 pages, but separate documents. It has been a long process occasioned by many delays.

On 5 November last year, the chair of the working party, Mr Wynack, an employee of the Ombudsman's office, gave a fairly lengthy report to the Senate environment committee as to his progress. His key recommendation was that he was then and is now working in an environment where his efforts were resulting in what he described as diminishing returns. The more he pressed, the more he searched for information, the less relevant or less vital results were being released to him by Telstra. As a consequence, he reported to the Senate committee that there was little or no justification or reason for the working party to continue in existence. Accordingly, the Senate committee asked Mr Wynack to pursue and finalise one or two matters that were still under review with Telstra. He did that. He reported to the Senate committee earlier this week when he was subject to some examination by relevant senators from both sides of the parliament.

Mr Wynack, in his report to the committee, has indicated that 150,000 documents have been provided to the parties. The parties have reported that that only involved some 10 or 15 per cent of documents that were of relevance or assistance. As a consequence, he was unable to be of further greater value into the future. It seems to me that the process of the working party, as is recognised by all persons on that committee, has reached its natural conclusion. Huge amounts of documentation have been sought. Huge amounts of documentation have been provided. Only a relatively modest proportion of that provided documentation has been relevant or of assistance to the five claimants.

Significant issues do arise. I think it is appropriate to refer to the final paragraphs of the committee report. In the second to last paragraph, the report of the committee tabled by Senator Eggleston says:

Estimates of Telstra's costs in relation to the CoTs issue since the claims were made exceed $20 million ($14.285 million to 1997 and rising). Most of the expenditure has been spent, not on settlement but on administrative and legal costs. It became quite clear early in the process that the claimants had in fact been disadvantaged by malfunctions in their telephone system. It is difficult to understand why Telstra appeared to prefer to deny that there was a problem and then prolonged the difficulties in establishing the extent of that problem.

The final sentence reads:

In the Committee's view Telstra should now seek to reach a negotiated agreement with the interested parties.

I had a discussion last night with Senator Eggleston and indicated to him that I was quite happy with that form of wording and would be prepared to support it in the chamber. I also indicated to Senator Eggleston, and I put it formally on the record now, that, in my view, whilst this working party process has now properly come to a conclusion, because it was unable to provide greater value in the future, there is no doubt in my mind from my review of the files that have been relayed to my office and discussions with the secretariat involved with this committee that the number of complainants—that is, five—whose claims are outstanding do have a legitimate cause of action and that their claims should be prosecuted and finalised.

If fault is to be allocated at this very early stage of the final lap, that fault lies at the door of Telstra. It really is appropriate for Telstra, a $100 billion corporation, to stop using its monopoly power, to stop retaining the services of dozens of highly paid solicitors and to come to the table and to seek to reach a negotiated agreement with these four or five persons. It is simply outrageous that Telstra, which is still a public corporation, can spend something in the order of $20 million—


Senator Boswell —Some $24 million.


Senator MARK BISHOP —I am informed by Senator Boswell it is $24 million—defending a claim when the claim before it is somewhere between $2 million and $4 million. This is simply an outrageous proposition and a waste of public money.


Senator Alston —The $2 million to $4 million is a total of all the—


Senator MARK BISHOP —The $2 million to $4 million is outstanding, as I understand it, Senator Alston. It was more for the original claim, but the original claims have been satisfied. (Time expired)