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Thursday, 5 December 2002
Page: 7324

Senator CHERRY (5:47 PM) —The Australian Democrats in very general terms support the Telecommunications Competition Bill 2002, but a number of issues will need to be addressed when we get into the committee stage. We have circulated two sets of amendments in that regard. The Democrats, the opposition and indeed the government will be moving quite a few amendments which will strengthen the legislation. For the record and to ensure ease of debate, we will be supporting the government's various technical and minor amendments to schedules 1 and 2 and also their proposed amendments in respect of industry plans.

We will be moving amendments to oppose the provisions in the bill to delete the requirement that carriers provide industry plans. I note that the opposition is to move an identical amendment to ours. We will be moving amendments to introduce merit selection for the ACCC and we will propose a code of practice to achieve that. We will also be moving a change to declarations to ensure that the ACCC conducts a public inquiry in the last 12 months of the five-year life of a declaration. That will assist in deciding whether a declaration will be renewed. We will not be supporting the opposition's amendment to increase the sunset on declarations to 10 years, but we will be supporting the opposition's amendment to remove the minister's power of direction to the ACCC when considering anticipatory undertakings.

The legislation implements the government's response to the Productivity Commission's Telecommunications competition report. It should be noted that a number of the Productivity Commission's recommendations have not been adopted by the government, including the recommendation to do away with the long-term interests of end users test. While assessing and encouraging future infrastructure investment is very difficult, the Democrats support the retention of the test. Telecommunications are ubiquitous throughout our economic and social lives, and that presents complex policy difficulties in trying to balance social objectives and the long-term interests of consumers and providing for fair competition. The Democrats are concerned that there is a tendency to privilege competition policy over a long-term strategic approach grounded in social policy objectives.

The bill implements some fairly key Productivity Commission recommendations plus a range of relatively minor measures. The key elements are: requiring the ACCC to produce model terms and conditions for core activities; the extension of provisions concerning exemptions and undertakings under part XIC of the Trade Practices Act to services that are not yet declared or supplied; allowing for accounting separation of Telstra's wholesale and retail operations; removing merits review by the Australian Competition Tribunal of ACCC arbitrations; and permitting the ACCC to defer consideration of an access dispute to consider an access undertaking relevant to the access dispute. The primary intention of all these reforms is to provide for more timely access to basic telecommunications services, provide for greater regulatory certainty for investors in new telecommunications infrastructure and facilitate greater transparency in telecommunications regulation.

The bill removes merits review on arbitrations but retains them for access undertakings. The intention is to lessen access delays through gaming and shift the emphasis to undertakings as the prime mechanism to resolve access disputes. The Democrats accept that one advantage of this approach is that undertakings apply generally to all access seekers, not just the parties in an arbitration dispute. One issue raised by the Seven Network and the Fairfax group was that the provisions removing merits review on arbitrations had an impact on two arbitrations relating to pay television. There are no outstanding telecommunications arbitrations. The opposition foreshadowed an amendment to grandfather these two arbitrations, and I note that the government will be moving a minor amendment to that effect, which we will be supporting.

As the accounting separation framework will be dependent on the scope of the ministerial direction to the ACCC to exercise its record-keeping rules, rather than the legislation per se, it is difficult to comment in detail on the consequences of this approach to Telstra's market dominance. The Democrats wish to make the point that if separation is to be a valid instrument then non-price elements must be included. The explanatory memorandum explicitly states the intention is to ensure:

Telstra publishes information comparing its performance in supplying `core' services to itself ... in relation to key non-price terms and conditions. (These will include faults/maintenance, ordering, provisioning, availability/performance, billing and notifications).

We will look closely at the minister's directions when they are tabled in due course.

During the course of consideration of this bill by the Senate Environment, Communications, Information Technology and the Arts Committee, on 13 November the ACCC announced that it would not oppose the arrangement that allows Optus and Foxtel to share pay TV programming as they accepted the undertakings proposed by Foxtel, Optus, Telstra and Austar to address the ACCC's concern about the potential anticompetitive effects of the planned pay-TV arrangements between Foxtel and Optus. The ACCC added:

Foxtel and Telstra have committed to digitise the pay TV network, although this commitment is conditional on the passing of the Federal Telecommunications Competition Bill and further decision making processes provided for in this proposed legislation. The proposed legislation allows potential investors to seek an exemption from the access regime which would otherwise apply if the services were regulated in the future.

It should also be noted that in correspondence to the committee, the ACCC stated:

These would be new and separate statutory processes to the previous consideration of the section 87B undertakings.

The Democrats believe that pay TV should be subject to a rigorous legislative access regime that ensures that independent content providers and service providers have full access on reasonable terms to the platform. While we have concerns that the Trade Practices Act does not provide a sufficiently robust system, as evidenced by the C7 arbitrations, we note that the issue of further access can be tested if Foxtel applies for a further anticipatory undertaking as a result of this bill. We would expect the ACCC to apply its criteria rigorously to this in the future.

There are cultural as well as economic issues involved with access to the pay TV platform. Diversity of views and content provision are clearly in Australia's interests. The potential for the digital platform to deliver a boost to diversity in an already concentrated media market is substantial. It may be appropriate that the ABA, as the custodian of cultural aspects of media, should have a greater role in decisions relating to access to pay television and the contents shown on pay television. But these are all issues for a debate at a later time and on a more appropriate bill.

It should be noted that the Foxtel-Optus deal will result in a further need to consider structural and competition issues in communications. As Professor Fels stated in his press release:

The ACCC continues to be concerned about the level of vertical integration in the pay TV industry, particularly given the position of Telstra as a major shareholder in Foxtel. This leaves the ACCC with concerns about the appropriate regulatory regime in both pay TV and telephony markets. These will be considered in a report to Senator Alston, who has requested advice on how emerging market structures are likely to affect competition across pay TV and telecommunications. This report will also include some of the concerns raised during the consultation process, which the ACCC did not consider relevant to the transaction being considered.

The Democrats would have preferred to have had this report at hand with the government's response in the consideration of this bill, as the linkages between those issues and the telecommunications competition regime generally are quite clear. However, given that this bill is a culmination of a two-year process, we would prefer the bill to proceed rather than delay it further. We will be seeking a commitment from government that it will consult all Senate parties on its response to the ACCC policy report and bring appropriate legislative responses to the parliament promptly. Leaving these issues up in the air in many respects is unsatisfactory and leaves significant competition issues in the media industry in a continuing state of flux. As Senator Lundy has pointed out, this reform bill is one step in a long ongoing reform process of the competition regime affecting telecommunications. Obviously, the next step will flow from that ACCC report.

I foreshadow that the Democrats will also be moving amendments in the committee stage dealing with the merits appointment system to the ACCC. Last week, the Senate supported a motion moved by Senator Murray expressing concern about the government's proposed appointment of Mr Graeme Samuel as the Deputy Chairman of the ACCC. In that motion, the Senate noted that there needs to be more consultation and that a merits based appointment process needs to be developed.

The amendments we will be moving— similar to the amendments we have moved 17 times in this place before—will be seeking to ensure that a code of practice is developed for an appointment process of ACCC commissioners. The appointment of ACCC commissioners is fundamentally important to the whole issue of how the competition regime is developed in the telecommunications sector and how it is developed across all sectors of the economy. The fact that there is no code of practice, other than consultations with the states on how those appointments will occur, is a very sad reflection on the government's commitment to probity and merit in terms of public appointments. The Nolan committee in the United Kingdom provides a very sound model, which we have adopted. We hope that the Senate will support those amendments when we move them in the committee stage. We will be supporting the second reading and we will be moving amendments accordingly.