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Monday, 5 June 1989
Page: 3356


Senator CHAPMAN(8.47) —The package of Bills we are debating this evening-in particular, the Australian Telecommunications Corporation Bill 1989 and the Telecommunications Bill 1989 to which I wish to direct attention-demonstrate the way in which the Government has failed the test of an adequate commitment to so-called micro-economic reform. That reform is essential if the living standards of all Australians are to improve through the 1990s and into the next century.

The supposed purpose of the Australian Telecommunications Corporation Bill is to improve the efficiency of Telecom through redefining its objectives, functions and powers, and also through financial restructuring. The Bill places three obligations on Telecom Australia: firstly, a commercial obligation; secondly, a community service obligation; and thirdly, general governmental obligations. Beyond that, it fails to introduce the sorts of reforms that are necessary if we are to see a competitive situation develop with regard to telecommunications in Australia.

A key aspect of micro-economic reform strategy for the restructuring of the public sector is that government business enterprises should be as efficient as possible. This legislation in some respects will place Telecom on a more commercial footing in line with private sector competitors. It retains its statutory community service obligation as a supplier of a standard telephone service as efficiently and economically as practicable. However, the Bill maintains an excessive degree of monopoly power in the hands of Telecom. In particular, Telecom ought not be able to use funds which it derives from the exercise of its monopoly powers to compete in the private sector. That is a significant shortcoming in this legislation.

Perhaps the more important Bill is the Telecommunications Bill 1989. This is the Bill which purports to provide greater competition in the area of telecommunications, particularly with regard to the provision of value added services and private network services. However, the legislation is totally inadequate in establishing the circumstances for this to occur. Indeed, as other speakers on the coalition side have said earlier this evening, Telecom's monopoly in the field of telecommunications effectively remains. The legislation sets aside specific telecommunication services for Telecom, the Overseas Telecommunications Commission Ltd and Aussat Pty Ltd, defined in the legislation as the carriers. These are the so-called reserved services. The legislation also establishes the Australian Telecommunications Authority, Austel, which will be the statutory body responsible for regulating the telecommunications industry.

Australia's telecommunications industry has been excessively restricted for too long. This legislation is an inadequate response to that excessive restriction and regulation. The proposals which the Government has put forward and which it has hailed as significant micro-economic reforms, are in fact false claims, because in this legislation the Government supports the retention of Telecom's monopoly powers. While there is a lot of talk about deregulation, no significant deregulation is being introduced in practice. The best example of this is Telecom's retention of the exclusive right to provide the first home telephone until 1992. It is not possible, under the legislation, for this monopoly to be broken until there is a further review, which in turn has to go to the Minister for decision.

There are also questions with regard to the present legislation which prevents Telecom's customers from taking legal action against it if they have suffered financial loss caused by its actions. This immunity is retained in the legislation. Most significantly, as I have said, the legislation entrenches the very broad monopolies for Telecom, the Overseas Telecommunications Commission and Aussat and very carefully protects those monopolies. The legislation also establishes an extensive regulatory and permit system which will be an additional burden on the private sector in the very limited areas that the Bill does open up to private competition.

Two categories of service are identified in the legislation: those defined as reserved services, that is, the services that are reserved for the carrier monopolies; and those defined as value added services, that is, services which can be provided either by the private sector or by the carriers competing with each other. The legislation also provides that Austel will determine the technical standards for customer equipment and customer cabling. The legislation further creates a cable licensing system for persons to install customer cabling and to connect it to the carrier networks.

The coalition believes that too much is retained in the arena of reserved services in the legislation-that is, that area retained in the monopolistic hands of the Government's own authorities. Those reserved services include: public switched telephone services; public switched data services; public switched text and video services; public switched integrated services digital networks; leased circuit services; and public mobile telephone services. In addition, there is the retention of the monopoly on the provision of the first home telephone. Another monopoly retained for Telecom is the provision of public pay phones. The legislation also prohibits the resale of leased circuit services, and the carriers have exclusive rights to the provision of all services and facilities within the boundaries of their networks.

When we look at the area of reserved services, we see it leaves very little to be provided by the private sector, those so-called value added services which the Government claims it is opening up to competition. That range of value added services is too limited. That is why, as I said at the outset, the Government has failed the test of micro-economic reform with regard to the telecommunications industry. The coalition believes that the monopoly for the public carriers ought to be restricted to the basic public switched telephone network, and the provision of those other services that I outlined a few moments ago as being reserved for the monopolistic main carriers in this legislation ought to be opened up to competition along with the value added services.

Another failure in the legislation is that it does not create Austel as an independent regulator. All Austel has been given the power to do is to administer the regulations that will be set out in the Bill, so it has a very limited degree of discretion to be an effective regulator. The class licence provisions will discourage product innovation and development of the industry for three reasons. The main one is that there is no provision in the Australian Telecommunications Act for persons to apply for the issue of new class licences. All that is provided is the opportunity for an informal approach to Austel with a suggestion that it look at issuing a new class licence; there is no provision in the Act which requires Austel to do anything about that matter. That will make it extremely difficult for innovation to occur in the industry-an industry in which innovation is the hallmark and which is one of the most rapidly growing areas of technology, not only in this country but around the world. The legislation again falls short of the claims that were trumpeted by the then Minister for Transport and Communications, now the Minister for Foreign Affairs and Trade (Senator Gareth Evans), on 25 May last year, when he made that statement on telecommunications reform to the Parliament. The legislation falls well short of the goals that the Government set at that time.

I want to deal in detail with a few of the quite specific shortcomings of this legislation with regard to its adequacy in establishing real competition in the telecommunications industry. There is no provision in the objectives of the Act for the promotion and maintenance of effective competition between persons engaged in the commercial supply of telecommunications services in Australia. If the Government is fair dinkum about opening up this area to competition, obviously that ought to be one of the objectives of the Act. By regulation under this legislation the Government could allow the monopoly reserved services area to encroach further onto the area of value added services. There is no provision in the legislation to prevent the Government, by regulation, extending in the future the area of reserved services. The legislation also prevents any shared use or resale of simple carriage of communications over private telecommunications networks; that is, there is no opportunity for the private sector to resell leased circuit capacity-again an unnecessary restriction if the Government is fair dinkum about opening up this industry to real competition.

There are also regulations authorised by the legislation to define the boundaries of the public switched telephone network or, indeed, any other network. This is an area which Austel ought to determine itself. The legislation ought to provide that Austel monitors the appropriateness of the boundaries of the public switched telephone network and makes recommendations concerning desirable amendments. That ought not to be undertaken through regulations attached to this legislation.

The legislation defines the exclusive rights of the monopolistic carriers, whereas it ought to allow the carriers to subcontract various areas without Austel needing to become involved. In other words, if those monopoly carriers want to use the private sector and want to involve subcontract activities in some of their own areas of responsibility, they ought to have the right to do that without seeking the approval of Austel. The legislation provides that Austel shall not authorise a person to supply, install or maintain and operate a facility that is connected to and within the boundaries of a network operated by a carrier unless that carrier has agreed. Again that is an entirely unnecessary provision if what we are seeking to do is open up this area to greater competition. Shortcomings of this nature raise serious questions about the extent of the Government's commitment to deregulation and, indeed, greater competition in this very important industry. There are others with which I could deal, but I know that the Minister for Foreign Affairs and Trade is anxious for the debate to be drawn to a conclusion so that he can respond, so I will not take up any more time. However, I direct his attention to those shortcomings in the legislation.

In summary, the legislation really means that the Government is maintaining its commitment to Telecom's monopoly powers. There is a lot of talk about deregulation, but in actual practice this legislation goes nowhere near far enough in ensuring that the telecommunications industry is opened up to the competition which would provide benefit to the majority of the Australian people. The coalition will in the committee stage move a series of quite specific amendments to various clauses of the legislation to open up the industry to that greater competition which is necessary and which will be beneficial to the Australian community. If the Government refuses to accept those amendments, we will have to wait until after the next election to see those better provisions introduced.

Coalition policy will require Telecom to operate on a competitive and commercial basis. We certainly remain committed to the provision of cross-subsidy. In government, we will convert Telecom to a public company. We will retain Telecom's responsibility for the basic telecommunications network, but all those other services that have been reserved as a Telecom monopoly in this legislation will be opened up to competition. Of course, that is the key to seeing an improved provision of telecommunications services to the Australian community.

This is an arena in which there is tremendously rapid technological change. New technologies are being developed with great rapidity. If Australians are to gain the benefit of developing technology, it will be achieved only if a maximum degree of competition is allowed within this sector. That is why this legislation is inadequate. The amendments that will be proposed by the shadow Minister will certainly go a long way towards making the legislation more adequate, but what is really needed is a coalition government to implement the policies we have developed with regard to this very important industry. I would urge the amendments on the Senate but, failing that, I look forward to a coalition government being in office after the next election to open up this area to effective competition.