The Senate Environment, Communications, Information Technology and the Arts Legislation Committee Provisions of the Telstra (Transition to Full Private Ownership) Bill 2003 October 2003 © Commonwealth of Australia 2003 ISBN 0 642 71301 4 This document was printed by the Senate Printing Unit, Parliament House, Canberra Committee membership Members Senator Alan Eggleston, Chair (LP, WA) Senator Sue Mackay, Deputy Chair (ALP, TAS) Senator Andrew Bartlett (AD, QLD) Senate Kate Lundy (ALP, ACT) Senator Santo Santoro (LP, QLD) Senator Tsebin Tchen (LP, VIC) Substitute Members Senator John Cherry (AD, QLD) to replace Senator Bartlett for matters relating to the Communications portfolio Senator Bill Heffernan (LP, NSW) to replace Senator Santoro for the inquiry on 1 October 2003 Participating Members Senator the Hon Eric Abetz (LP, TAS) Senator the Hon Nick Bolkus (ALP, SA) Senator the Hon Ron Boswell (NATS, QLD) Senator Bob Brown (AG, TAS) Senator George Campbell (ALP, NSW) Senator Kim Carr (ALP, VIC) Senator Grant Chapman (LP, SA) Senator Stephen Conroy (ALP, VIC) Senator the Hon Helen Coonan (LP, NSW) Senator Christopher Evans (ALP, WA) Senator the Hon John Faulkner (ALP, NSW) Senator Alan Ferguson (LP, SA) Senator Jeannie Ferris (LP, SA) Senator Brian Harradine (IND, TAS) Senator Leonard Harris (PHON, QLD) Senator Bill Heffernan (LP, NSW) Senator Gary Humphries (LP, ACT) Senator Susan Knowles (LP, WA) Senator Meg Lees (AD, SA) Senator Ross Lightfoot (LP, WA) Senator Jan McLucas (ALP, QLD) Senator Brett Mason (LP, QLD) Senator Julian McGauran (NATS, VIC) Senator Claire Moore (ALP, QLD) Senator Shayne Murphy (IND, TAS) Senator Kerry Nettle (AG, NSW) iii Senator Robert Ray (ALP, VIC) Senator John Watson (LP, TAS) Senator Penny Wong (ALP, SA) Committee Secretariat Mr Michael McLean, Secretary Ms Chris Samuel, Principal Research Officer Ms Jacquie Hawkins, Research Officer Ms Sharon Babyack, Executive Assistant Committee Address Environment, Communications, Information Technology and the Arts Legislation Committee S1.57, Parliament House Canberra ACT 2600 Tel: 02 6277 3526 Fax: 02 6277 5818 Email: [email protected] Internet: http://www.aph.gov.au/senate/committee/ecita_ctte/index.htm iv Table of Contents Committee Membership ......................................................................................... iii Recommendations ................................................................................................... vii Chapter 1: Introduction............................................................................................1 The reference.........................................................................................................1 The Bill..................................................................................................................1 Background ...........................................................................................................1 Conduct of the inquiry...........................................................................................4 Discussion .............................................................................................................6 Chapter 2: Summary of evidence received...................................................... 9 Satisfaction with standards of service and employment implications ................11 The benefits of privatisation................................................................................13 Chapter 3: The sale process ............................................................................ 17 Chapter 4: The best way to protect consumers: regulation or ownership? ................................................................................ 21 Current consumer safeguards..............................................................................22 Targeted funding for future proofing ..................................................................23 Additional safeguards..........................................................................................24 Disability services ...............................................................................................27 Chapter 5: Competition regulation................................................................ 29 Accounting separation.........................................................................................32 Chapter 6: Conclusions and recommendations ............................................ 35 Labor Senators Minority Report: Keep Telstra Public................................. 39 Chapter 1: Introduction............................................................................... 39 Summary of the Bill..............................................................................................39 Conduct of the inquiry ..........................................................................................40 Chapter 2: Summary of evidence received ................................................ 43 v Chapter 3: Sale Scheme Hybrid Securities & Other Financial Matters .....................................................................................53 Sale Scheme Hybrid Securities ...........................................................................53 Other Financial Matters.......................................................................................54 Chapter 4: Conclusion: Keep Telstra Public............................................. 57 Recommendation..................................................................................... 59 Australian Democrats Minority Report ........................................................ 61 Introduction .........................................................................................................61 In the Public Interest and Benefit........................................................................64 Recommendations ...............................................................................................86 APPENDIX 1: List of Submitters .............................................................................87 APPENDIX 2: Witnesses at Public Hearings ..........................................................93 APPENDIX 3: Exhibits..............................................................................................99 vi RECOMMENDATIONS Recommendation 1: The Committee recommends that reviews by the Regional Telecommunications Independent Review Committee (RTIRC) into telecommunications in regional, rural and remote parts of Australia be undertaken at least every three rather than every five years. Recommendation 2: The Committee recommends that in the event that a recommendation or recommendations of the RTIC are not accepted by the Minister, the Minister be required to give reasons for the decision. Recommendation 3: The Committee also recommends that the Government launch a public awareness program to improve understanding of the current system of regulation of the telecommunications industry and the rights of consumers under this regulatory regime. Recommendation 4: The Committee reports to the Senate that it has considered the Telstra (Transition to Full Private Ownership) Bill 2003 and recommends that the Bill should proceed. vii viii CHAPTER 1 INTRODUCTION The reference 1.1 On 13 August 2003, on the recommendation of the Selection of Bills Committee, the Senate referred the provisions of the Telstra (Transition to Full Private Ownership) Bill 2003 to the Committee for inquiry and report by 30 October 2003. 1.2 The inquiry was specifically advertised twice, initially in all national and major metropolitan newspapers on 20 August and subsequently on or around 17 September 2003 in the regional press that published on a daily basis. Invitations to submit were also placed in The Australian on 27 August and 10 September, and on the Committee’s webpage. The Committee received 168 submissions, which are listed at Appendix 1. 1.3 The Committee took evidence from 89 witnesses at seven public hearings in Canberra (17 September and 2, 7 and 14 October 2003), Sydney (30 September 2003), Dubbo (1 October 2003) and Nambour (3 October 2003). Details of witnesses who appeared at the public hearings are listed in Appendix 2. In the course of the hearings witnesses tabled a number of documents and other material for the information of the Committee. These exhibits are listed in Appendix 3. 1.4 The Committee expresses its appreciation to all those who made submissions and gave evidence to this inquiry. The Bill 1.5 The purpose of the Bill is to amend the Telstra Corporation Act 1991 to repeal provisions that require the Commonwealth to retain 50.1% of equity in Telstra, thus enabling the Corporation to become fully privately owned. The Bill sets out arrangements for the conduct of the sale of the Commonwealth’s remaining equity in Telstra. It also includes provisions designed to future proof Telstra’s services after the sale, especially in regional, rural and remote communities, including a framework for regular independent reviews of the adequacy of regional telecommunications services.1 Background 1.6 This is the fifth Senate committee inquiry into the privatisation of Telstra. In May 1996, the Government introduced legislation to Parliament to sell one-third of the Commonwealth’s equity in Telstra Corporation by means of a share float. The Bill 1 Telstra (Transition to Full Private Ownership) Bill 2003, Explanatory Memorandum, pp. 2-3. 2 was subsequently referred to the Senate Environment, Recreation, Communications