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Tuesday, 18 May 1993
Page: 727


Senator TIERNEY (4.20 p.m.) —The matter of public importance before the Senate this afternoon concerns the continuing failure of the Minister for Transport and Communications (Senator Collins) to exercise any authority or control over the pay television tendering process. I enjoyed listening to Senator Cooney's speech. I would remind him that at the end of the day when the vote is taken it is not a matter of whether the decision that is before the Senate is right or wrong; it is a matter of numbers in the Senate. Unfortunately, the Government probably has the numbers on this matter.

  That is a great pity because the problems that have resulted from the Government's handling of this issue have been absolutely incredible. The Australian Financial Review of 13 May 1993 stated:

The Government's handling of pay TV affair has seriously hurt investor interest in Australia with all but a few players abandoning their business plans according to senior broadcasting industry representatives.

Industry representatives have been reported as saying that several major international broadcasting companies had expressed an interest in developing pay TV in Australia but that that interest has largely evaporated. The Government's backflip on microwave pay TV and the controversy over the satellite pay TV tendering process have been largely the cause of this.

  According to last week's reports, only a handful of international players have retained an interest in pay TV; the rest have dropped out. This was the situation before the latest debacle in the long and sorry saga of this Government's pay TV policy. We can safely assume that what little international investment interest remains has been almost completely eliminated due to the disaster with the MDS tendering processes which have just been proved to be legally invalid.

  Now that Australia has been made the laughing stock of the international investment community, we have to ask who is responsible. The logical answer to this question is the Minister for Transport and Communications, Senator Collins. But, in an unprecedented abrogation of ministerial responsibility under the Westminster system, the Minister has failed not only to accept responsibility for the debacle but also to properly answer the many questions asked of him on this issue. In fact, he has attempted to palm off the responsibility for Australia's pay TV nightmare onto the public servants in his department. Unfortunately for the Minister, however, this really does not wash.

  Throughout the whole debacle of the tendering process for both the satellite and MDS pay TV licences, the Minister has failed completely to exercise any authority or control over those processes. The Government has not got it right ever since the tendering process first commenced. In December we had the ridiculous situation with regard to the Broadcasting Services Bill 1992 in this place. The Government could not get its policy together from one day to the next.

  In December last year, the Government called for tenderers for six pay TV microwave licences with a closing date of 29 January 1993. In January this year, the Minister signed a determination specifying the price based allocation system for the sale of the satellite pay TV licences. Throughout the whole process it was always clear that the Government wished to have a technologically neutral approach to the pay TV industry. During January, investors in satellite pay TV, including the media mates of the Federal Government, started worrying about the capability of MDS technology to distribute a complete pay TV service.


Senator Collins —I will tell you what. If they were my mates, I would hate to do something to upset them.


Senator TIERNEY —Is that right?


Senator Collins —Have a look at the wall to wall press.


Senator TIERNEY —A lot of people are upset by what the Minister has done. That is why I am sure this saga will go on for the next few weeks, particularly when we have the findings from the Minister's department—and, I hope, from a Senate inquiry, as soon as we can get the Australian Democrats to agree to have one.

  We had the amazing decision, based on what happened in January, to call off bidding for the MDS pay TV licences the day before the tenders were due to close. At this point it was clear that the Minister was not exercising authority over the tendering process for MDS pay TV licences. He claimed to be ignorant of the potential of MDS technology to provide a comprehensive pay TV service, despite meetings between departmental officials and representatives of Mr Steve Cosser, who had a clear intention of pursuing broadcast services using MDS technology.

  In addition, in order to reach the decision to call off the MDS tendering process, the Prime Minister had to intervene with the Department of Transport and Communications. Surely this is a clear indication that Senator Collins was not exercising proper authority and control over the tendering processes being run by his department. This is especially the case, given that the Prime Minister felt the department had notoriously misled the Cabinet on the extent to which MDS might be used for pay TV.

  Senator Collins was not keeping up with what his department was doing, or what it knew. This is, of course, if we accept the claim of Senator Collins that he was ignorant of the potential of MDS. It would seem extraordinary that the Minister was not aware of the capabilities of MDS technology.

  Mr Cosser's intentions seemed clear. There have been numerous claims that industry representatives had discussed the issue with both the Department of Transport and Communications and the Department of the Prime Minister and Cabinet. Someone is not being completely truthful and we have yet to discover who.

  The fact remains that the Minister was not aware of the potential of MDS technology, and he should have been. If the department was aware of that potential and it did not inform the Minister of this, as it should have, the implication is that the Minister is not exercising enough authority within his department. Subsequent to the decision being made to call off the tendering process for MDS, it came to light that the decision was in conflict with the objectives of the broadcasting Act. Therefore, legislation was necessary to give effect to the Minister's decision.

  This is yet another example of a government making decisions with regard to pay TV without properly looking at all the implications of the action. Additionally, the inevitable legal action followed with both Kerry Stokes and Steve Cosser launching legal proceedings for misleading and deceptive conduct in regard to the MDS tendering process.

  The reason given by the Minister for abandoning MDS tendering was to stop `inferior technology' from coming onto the market. This conflicts with the original intention of the government legislation being technologically neutral and flies in the face of plans which were clearly under way to establish a broadcast pay TV service through MDS technology.

  Even Senator Richardson noted on the Hinch program on 22 February that the Government `had a problem' when it realised that pay TV could not be provided by MDS to most of Melbourne and 70 per cent of Sydney. Not surprisingly, in March this year the Federal Court ruled that the Government had invalidly terminated the tender process for MDS pay TV.

  The Government then offered an additional explanation for its decision on MDS technology and that was that satellite technology was the preferred option of the Government. This appears to contradict its original claims of the desirability of technologically neutral legislation governing the pay TV industry.

  We then discovered yesterday that the reopened MDS tendering process, which only had 10 days to go before tenders closed, would have to be abandoned because the process was, according to Mr Roger Gyles QC, `invalid and of no effect in law'. This problem arose because of the technical difficulties which came about because the ministerial determination for the reopening process was gazetted incorrectly.

  However, the secretary of the department became aware of these technical difficulties during the preparation of the case for the Federal Court proceedings some months before. For some inexplicable reason, this information was not passed on to the Minister until late last week.


Senator Collins —Correct.


Senator TIERNEY —I see the Minister nodding his head. I would really like to know why the Minister was not informed earlier and, if he was, why did he not act earlier?

  The whole unfortunate debacle with regard to the tendering process for MDS pay TV licences clearly shows that the Minister has not been exercising proper authority or control over the process. He did not keep abreast of developments in the industry; his department did not keep him informed; the Prime Minister had to intervene; and decisions were made without really looking at the full implications of those decisions. If this is not enough to show that the Minister has lost control and seems to have no authority over his department, we can look at the other side of the pay TV debacle, that of the tendering process for satellite pay TV licences.

  The tenders for satellite licences closed on 28 April 1993, with speculation that the winning bids would be between $50 million and $80 million. The Government announced, however, that the winning bids came from UCOM and Hi Vision, with bids of $177 million and $212 million. It was immediately apparent that these successful applicants would have great difficulty in raising the huge amounts of money that they had bid. The tendering process had obviously been a farce. There was no requirement for a five per cent deposit in the tendering process, a requirement common to the MDS process and tendering for the third mobile telecommunication licence.

  The Minister claimed that the change in policy to omit the requirement for a five per cent deposit was not pointed out to him by the department and that, therefore, he cannot be held responsible for the joke that the tendering process has become. The Minister then changed the tendering process so that, if UCOM and Hi Vision fail to finance their bids, the next highest bidder will have to find the five per cent deposit within three days of being advised it is in the running for a licence.

  This has been described as unprecedented and heinous legislation, retrospectively changing the rules for a tender halfway through the bidding process. This also fails to address the other problem within the bidding process, that of multiple collapsing bids. It would appear that the department had been informed of the possibility of multiple bids but, again, it remains a mystery as to why the department failed to act to prevent this. It also remains to be seen why the Minister was not informed of the possibility of these bids and why he failed to act.

  The problem is clearly that the Minister does not have control over his department. He has not exercised any authority or control over the tendering processes for pay TV licences. His department is not briefing him properly, and the Minister has not shown any desire to be briefed properly. The Minister is signing determinations and authorisations without having all the facts or, indeed, understanding what he is signing. That is a neglect of responsibility which he must accept, and his failure to do so is a disgrace. Like his senior public servants who have offered to do the right thing, he should stand aside.