Telecommunications (TSO Broadband and Other Matters) Amendment Bill — Second Reading 
Telecommunications (TSO Broadband and Other Matters) Amendment Bill — Second Reading 
[Volume:673;Page:19293] 
Telecommunications (TSO Broadband and Other Matters) Amendment Bill 
Second Reading 
Hon STEVEN JOYCE (Minister for Communications and Information Technology) 
: 
 I move  
That the Telecommunications (TSO Broadband and Other Matters) Amendment Bill be now read a second time 
. I begin by thanking the Finance and Expenditure Committee for its consideration of this bill. I acknowledge the submissions that have resulted in changes to the bill and also the Maori Party for its work to ensure that Maori maximise the opportunities provided by the Government’s broadband plans. 
During its consideration the committee considered a large and complex Supplementary Order Paper that allows for a structurally separated Telecom. By including Supplementary Order Paper 204 the committee recognised that structural separation will resolve many of the issues that have arisen in the past from a vertically integrated monopoly. The bill contains the regulatory framework for the Ultra-fast Broadband Initiative and the Rural Broadband Initiative and it enables the funding of the Rural Broadband Initiative. 
The key issue raised by the committee and by submitters in relation to the bill was regulatory forbearance as the bill prevents the Commerce Commission from regulating wholesale prices. Although I consider that the concerns raised were mostly theoretical officials and I have listened to the committee and have found an alternative solution that will give infrastructure builders confidence to stay committed to their low capped prices and that will give customers confidence that they will continue to get the best prices over the 8½-year build period. This alternative option relies on a key change made to the bill by the committee which was to bring forward the general review of the telecommunications regime to 2016. The committee made changes to improve the content transparency consultation and decision-making processes around the development of copper and fibre open-access undertakings. Penalties have also been increased from $300000 to $10 million for breaches of the fibre undertakings consistent with copper. These amendments give additional comfort to the sector about the robustness of the undertakings and the monitoring and enforcement of them. 
The committee has also required that the Chorus copper undertakings must specify reasonable time frames for the transition away from sharing of systems and services between Chorus and Telecom. This amendment is a pragmatic solution that encourages a move away from those sharing arrangements but that recognises that imposing arbitrary fixed deadlines may have resulted in forced migration from systems or services at the expense of service quality standards for access seekers and consumers or in complex and costly variations of processes. 
I also support the committee’s amendment to the definition of “equivalence” to make it clear that the Government’s intention is to apply the equivalence of inputs standard that applied under the Telecom operational separation regime. This will remove concerns that the previous definition watered down the important equivalence test. Further making it mandatory in the deed that all local fibre companies build their network equivalence of inputs ready for unbundling at layer 1 in 2020 will ensure that the new fibre network is being built for full open access and competition after the initial build stage. 
The committee’s amendments to the Commerce Act authorisations tighten the authorisations so that they cannot be used for arrangements outside those between the Government and Ultra-fast Broadband Initiative and Rural Broadband Initiative providers and make it clear that they are time-bound. I will be tabling a Supplementary Order Paper at the Committee of the whole House stage that will make the amendments to remove forbearance and other technical amendments to the bill that have arisen since the report back. 
This bill provides the regulatory framework for improvements in broadband that will be truly transformative to this country. The Ultra-fast Broadband Initiative will see New Zealand leapfrog its competitors and become one of the most connected countries in the world. Its broadband speeds will revolutionise the way Kiwi firms do business the way our kids learn and the way our health services deliver to us as patients. The Rural Broadband Initiative will deliver on the Government’s plan for vastly improved and affordable broadband services for rural New Zealand. Finally the bill also facilitates a dramatic improvement in the way New Zealand’s telecommunications industry is organised. I commend this bill to the House. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 Let me say from the outset that Labour opposes the Telecommunications (TSO Broadband and Other Matters) Amendment Bill and we will vote against it. Labour is committed to faster broadband. We are committed to delivering a digital transformation for this country. We are not committed to supporting a charade and the formation of a new fibre monopoly that encourages anti-competitive price-gouging behaviours and that will not be good for consumers. 
This bill takes us backwards and creates a new monopoly for broadband that is free of proper regulatory control and will increase the cost of broadband for New Zealanders. The bill that came out of the Finance and Expenditure Committee was an extraordinary thing to behold. It included as its centrepiece a 10-year regulatory holiday for the winning bidder which we all knew would be Telecom. This is Steven Joyce’s baby. It was the price he was prepared to let the country pay for the new fibre network by handing the price-setting powers to a secret contractual arrangement between Crown Fibre Holdings and the contractor with no ability for the regulator to intervene. Thankfully he has ditched it but he did so at the last minute after his bill came back to the House and it was done under force. Consequently the compromise position allows the Commerce Commission to regulate pricing on fibre but if the commission believes that prices should go lower at some point Steven Joyce says the Government should wear that risk not the consumer and he gets to make the decision on whether to regulate. Why would the Minister ever agree to regulate if it will cost the Crown? What is the nature of the compensation being promised to the contractor rolling out broadband? It effectively insulates the contractor from any risk. Steven Joyce has confirmed that no analysis has been done of the risk to the Crown. 
Labour has indicated publicly—and I repeat it—that it may repeal other sections of this legislation that it believes will have an anti-competitive effect on the telecommunications industry to the detriment of consumers. John Key’s personal guarantee was to deliver ultra-fast broadband fibre to 75 percent of New Zealand homes by the end of this decade for $1.5 billion. People thought that sounded good. It was No. 2 in John Key’s top 10 pledges before the 2008 election. Instead they will get Telecom taking its time to deliver the vast bulk of the Ultra-fast Broadband Initiative to New Zealanders. Telecom has a long and infamous track record of price-gouging and monopolistic behaviour. It is not even committed to New Zealand’s need for a fibre scheme. It is committed to its existing copper asset and believes that New Zealanders can receive adequate broadband services over it for at least the next decade and possibly longer. It has a string of court convictions for ripping off the public for charging too much and for not providing accurate information on the services it is offering. This Government swore it was not in collusion with Telecom but took us all through an elaborate charade to get to the point where it awarded Telecom the bulk of the contract. 
Labour believes that this bill is deeply flawed and allows anti-competitive behaviour. Even though the last-minute amendment allows some influence by the independent regulator this legislation will disadvantage New Zealand consumers. From the start this bill has been severely hampered by the rushed and secretive drafting process and a complete disregard for potential compromises. The Government used the commercial tendering process as an excuse to avoid proper consultation. 
The bill does a number of things. The most significant thing it does is set out a process for Telecom to separate into two companies so it can qualify for the majority taxpayer-funded stake in rolling out ultra-fast broadband. That contract as we know is now being let to Telecom which we all knew it would be. Many submitters expressed concern about the bill’s potential to entrench anti-competitive behaviour by blocking the influence of the independent regulator. Concerns were expressed that it would result in the price of broadband fibre to New Zealanders rising rather than falling and Labour shares those concerns. 
It is important to put on the record that much of our opposition to this bill lies in the way it came before the House and before the select committee the secrecy and lack of transparency surrounding that tender process for ultra-fast broadband the method in which the Supplementary Order Paper to this bill was put before the select committee and the speed with which it was rushed through—as well as the substance. 
In addition to this I will talk about the perceived conflicts of interest on two fronts within the tender process. The first relates to revelations that Murray Milner who is a director of Crown Fibre Holdings acted as a consultant for Chinese telecommunications firm Huawei while simultaneously serving as a director for Crown Fibre Holdings. That represents a potential conflict of interest in that Crown Fibre Holdings is managing the tendering process to provide coordination assistance and commercial technical advice to the ultra-fast broadband selected partners in electing the equipment suppliers for passive infrastructure and layer 2 equipment for the Ultra-fast Broadband Initiative. That is the same contract that Huawei is vying for to provide equipment for the roll-out of ultra-fast broadband. 
The second conflict of interest relates to Bruce Parkes who is currently the deputy secretary at the Ministry of Economic Development for the energy and communications branch. He was a senior Telecom executive who was involved in what was later found to be anti-competitive practice by a High Court judge Rodney Hansen in his judgment that penalised Telecom for historical breaches to the Commerce Act. Bruce Parkes’ responsibilities as a deputy secretary are for the information and communications technology policy and the ultra-fast broadband plan which means that he is heavily involved in the development of and advice on the broadband policy. 
This comes down to the fact that before the election this Government made a promise to the New Zealand public that it could not keep. It promised that 75 percent of homes businesses schools and hospitals would be connected by fibre within 10 years for $1.5 billion. But the promise was too big and the Government could not deliver. Steven Joyce has spent the last 2½ years working out how to come up with an elaborate way of appearing to deliver a service that many New Zealanders will just not get—certainly not within 10 years and not at the speeds being promised. 
In September 2009 the Government released its final proposal for the Ultra-fast Broadband Initiative. At that stage the Government investment would have been directed to an open-access wholesale only passive fibre network infrastructure and let us remember why the Government wanted it. The Government was looking for a step change in broadband services to deliver economic benefits to New Zealand. However in July 2010 the policy was changed; no longer was the focus on providing passive infrastructure that anyone could use. Instead the local fibre companies—the LFCs as they are called—would not have to share that passive infrastructure and they would be protected from the regulator until 2020. This meant they would have the power through to 2020 to restrict access to the network and impose value pricing so that consumers would get only what they were willing to pay for. This would result in much of their fibre capacity not being used even though the cost of letting consumers have that capacity would have been close to zero. It would allow the local fibre companies to make more money potentially reducing the capital cost to the Government of the roll-out. But the price being paid instead is that this country will miss out on the full potential of that step change which is at odds with the rationale for the intervention in the first place. 
Telecom seems to have won the majority of the contracts because of a perception that selecting the lines companies would not guarantee fibre coverage or uptake due to competition from Telecom even though that competition would arguably produce better results for consumers including better speeds across the board. So we have ended up with legislation before this House that will allow and even promote anti-competitive behaviour which will promote monopolistic behaviour that will likely result in higher costs to consumers for the new broadband network. What this is all about is a good deal for New Zealanders and a step change for the economy. We will get neither through this legislation. 
AMY ADAMS (National—Selwyn) 
: 
 It is a great pleasure to rise in the second reading debate and speak in favour of the Telecommunications (TSO Broadband and Other Matters) Amendment Bill which as others have said has spent some time before the Finance and Expenditure Committee of which I am a part. 
I will start my contribution by taking a moment to say broadband is very much infrastructure. You know it did not use to be as little as 5 or 10 years back but now I think it is quite safe to say broadband is as important an item of infrastructure as power phones or roading. I have been amazed as I am sure many members of the House have at how quickly New Zealand has adopted broadband access and taken it to be an absolutely fundamental part of existence. I say that particularly in my capacity as an electorate MP for a largely rural electorate. When people are not in the major cities they increasingly rely on access to the world through broadband. Having broadband in our houses lets us connect with our suppliers customers and advisers—our lawyers accountants and bankers—as if we were there. The productivity gains we have made from access to broadband particularly in rural and more remote communities are significant. 
New Zealand is a remote country yet through access to good high-quality broadband we can do business throughout the world in an almost seamless way. It is a way of New Zealand negating the geographical disadvantage that we have. But we were seeing that fibre was not being rolled out beyond very limited central business district areas and that was tremendously disadvantageous to rural and remote communities. In order for that roll-out to happen it was going to take the Government to be prepared to put up some money to incentivise business to get on board. That is what we promised in 2008 to the people of New Zealand; that is what New Zealand elected this National-led Government to deliver. This bill is a large part of delivering that roll-out which will see 75 percent of New Zealanders have access to high-speed ultra-fast broadband and the vast bulk of the rest of New Zealand be connected through our Rural Broadband Initiative. That will make us one of the most connected countries in the world and I think that is something to be very very proud of. 
One of the things I think it is important to put on record is that this initiative is about the Government and private enterprise working in partnership to roll out the framework. The framework has open access so as that backbone infrastructure is rolled out any internet service provider can access it and offer services to its customers. This is not about Telecom being the only game in town—and I will come back to Miss Curran’s comments on Telecom in a moment—this is about the backbone infrastructure being rolled out in a partnership between the Government and industry and every internet service provider being able to access it in order to provide services to New Zealanders. 
I will touch on a couple of other things in the bill before I move back to the comments of the speaker who preceded me Clare Curran. The bill also amends the Telecom service agreements between the Crown and providers. It sets up the telecommunications development levy to fund the service obligation compensations the upgrade of infrastructure and the likes of that. It sets out of course the functional separation rules for Telecom. So although a big part of this debate will no doubt focus on the Ultra-fast Broadband Initiative and Rural Broadband Initiative roll-outs there are also those important other aspects to the bill that I think are worth putting on the record. 
We have heard an interesting array of objections from Labour. Over the course of the ultra-fast broadband discussions and the rural broadband discussions we have heard Labour members say it is too fast: it is all happening too fast. We have also heard them say it is all happening too slowly. We have heard Labour members say the Government is putting in far too much money and we have heard them say the Government is putting in not nearly enough money. Now we hear them hammer us for selecting Telecom as the provider. 
Let me read a couple of comments from Ms Curran who just stood there and made a vitriolic attack on Telecom as the provider. Let me read to members some of these comments. “It looks very interesting. I certainly think any proposal that puts Telecom seriously in the frame is worthy of merit and should be looked at carefully by Crown Fibre Holdings and the Government because the future of Telecom is important.” I thank Ms Curran for that. What about these comments? “We think Telecom should have a future in New Zealand and if that requires it to structurally separate it should seriously consider doing so. They should have a crack at accessing the broadband money.” “It is obvious to everyone that Telecom desperately want to and need to be in the running.” “It is not in New Zealand’s interests for Telecom to be run into the ground and excluded from the biggest network build for the next generation or more.” 
Those comments come from the same member who just stood in this House and attacked this Government and attacked Telecom as the broadband provider. The Labour members need to decide where they stand. Why are they not supporting this bill? Why is the broadband initiative at the same time too fast or too slow delivering too much or too little and involving the right provider or the wrong provider? Labour members’ only real objection to this bill is that they did not introduce it and the National-led Government has done so. I am very pleased to commend the bill to the House. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I start off by broadly agreeing with the opening points that Amy Adams made and at the same time I congratulate her on her promotion to the chair of the Finance and Expenditure Committee. She knows I think she should be in Cabinet because she has more talent than many of the junior members but at least it is recognition and a step in the right direction for her—although it might be some time of course until she gets where she should have been earlier this year. 
The point I agree with her on is that broadband is very important. All of us know that it is important and that the quality of broadband can make an enormous difference to the quality of life for people and to the way our economy works. I also agree with her point—and it is a point made by the Minister in charge of the Telecommunications (TSO Broadband and Other Matters) Amendment Bill Steven Joyce—that this is part of the country’s infrastructure now in a way that sewerage water telephones power and other utilities are. Part of the problem that has occurred with this Minister is that he has been caught up in the excitement of the stuff built on top of this infrastructure—the electronic stuff and the add-ons—and he has therefore lost focus on essentially what is happening here. 
What is happening is that we are having fibre laid. It is effectively a pipe. We are having something through which electronic signals go—I do not pretend to understand how it works—and we are having that fibre laid around the country in places where it would not be laid otherwise. This is being encouraged in two ways. One is by a very attractive subsidy to Telecom in particular from the Government and the other is by a regulatory arrangement that ensures that the company makes hyper-profits as a result of this investment. I say to the Minister that it is my view that Telecom would have done this with either the subsidy or the regulatory preference it has and that he did not need to do both. We have seen a case of his being conned by a company that has clearly superior public relations superior legal and superior technical people compared with the people who were giving him immediate advice. 
I shall focus on the important thing that is happening here. That is the lower level the bottom of this the way it was originally started and that was the laying of the fibre and not the add-ons. That is the difference that is happening here and it is where the focus should be. 
I ask the Government to focus on the returns Telecom is giving. The figures the Minister and the committee got showed an average cost per connection of $2500. Telecom has announced—and the Minister has agreed and has underwritten this figure—a $37.50-a-month charge for basic services. That is an 18 percent per year return. Telecom is getting at least double the risk-free rate of return it should be getting; it is getting 18 percent. I will be interested in the comments from Roger Douglas of ACT about these regulatory arrangements. That figure is for the basic level but Telecom says that the average cost per consumer—and this is the average cost that has been agreed to as part of these arrangements by the Minister—is $50. That equates to a 24 percent—24 percent—risk-free rate of return for Telecom on the $2500 it is putting into every connection. 
I do not want to sound too much like Roger Douglas but I have some sympathy for his views on excessive regulation in this area and I ask the Government what business it is of the Crown to guarantee to Telecom a foreign-owned company a 24 percent rate of return at least until 2020 on its investment. It is wrong and it is excessive and for a Minister to stand behind that company and guarantee that is inappropriate. 
The other question I want to ask is why the Minister last July—and I want to make a water analogy because I understand that better—moved from having the pipe as the key part where the separation would occur to having the pipe and the taps. What we have now is effectively Telecom with the power to turn the tap up or down with the pipe so that individuals can get better quality and they can get a lot more broadband. It costs Telecom nothing extra at all. But if one is prepared to pay $100 or $200 or $400 a month instead of $37.50 one can get what the Government has paid for. I ask people why Telecom should face no additional costs whatsoever. We have an unconstricted broadband arrangement. We were meant to get unconstricted access for everybody but Steven Joyce has given Telecom the right to turn the tap right down for a lot of consumers unless they agree to pay an excessive amount of money to Telecom. That will last until 2020. 
I will be kind to Steven Joyce and say he does not understand what he is doing. I think that is the kindest thing. Otherwise he would understand that he is giving Telecom on average a 24 percent rate of return but more important saying to every school around the country—and it is all very well Anne Tolley effectively paying for pipes to go into schools; that is what is occurring—and saying to the decile 1 schools in my electorate that they do not pay $37.50 a month they pay $400 a month in order to get unconstricted access which is available. It costs Telecom not a cent more to turn on the tap. Why is that fair? How can that be fair? The Government has already paid for this fibre the subsidy has occurred and we are allowing Telecom to extract what is in my view economic rent in a way that is totally inappropriate. 
There has been a lot of discussion about the involvement of the Commerce Commission. There is debate and it will be ongoing about whether the present arrangement is better than the arrangement that was there before. My view frankly is that they are both dogs. But the idea is that the Government will underwrite if Telecom is found to be acting uncompetitively as it has on dozens of occasions in the past; the Government will pay its bills. The Government will pay the bills for anti-competitive behaviour if the Commerce Commission finds it to be that. 
What sort of democracy do we live in? This is the sort of arrangement I would expect from Mugabe or people in the old Soviet Union or countries like that. But what it does show—and I just want to go back—is either we have a Minister who does not understand what he has done or we have someone who is in the pocket of an international company. What he has done is turned on a money tap a 24 percent return guaranteed to Telecom. It stinks. It stinks and it is wrong. 
Hon TAU HENARE (National) 
: 
 I raise a point of order Mr Speaker. To say that the Government is in the pocket of some foreign country— 
Clare Curran 
: Company. 
Hon TAU HENARE 
: —foreign company or country—is not allowed. Members cannot accuse the Government of being in the pocket of somebody overseas—or anybody. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Can I just refer the Hon Trevor Mallard to Speakers’ rulings 51/5 and 52/1. It is not in order to say that the Government has been “dictated to” or has “received instructions” or “directions” or anything like that—to imply those imputations. The member has finished his speech. I was going to ask him to desist. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Assistant Speaker Robertson. Nga mihi nui ki a koutou. Kia ora. It is a real privilege to take a call today on the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. The Green Party supports the bill’s intention of ultra-fast broadband and a roll-out across the country of high-speed broadband but we thoroughly disagree that this bill is able to deliver that. We support the intention but we will not be supporting this legislation through the House. We supported it at its first reading but after going through the select committee process witnessing the poor process and witnessing the poor outcome that has come out of these last-minute deals that were stitched up in back rooms the Green Party cannot support this bill even though we wholeheartedly support better faster and cheaper broadband. We will keep working with whatever Government takes the Treasury benches to make sure we get it. 
We believe that ultra-fast broadband can transform our economy and our society through better businesses through lowering air miles and greenhouse gases through videoconferencing through better telecommuting and through medical advances such as sending magnetic resonance imaging scanning images to doctors potentially all around the country and all around the world. It can make our medical system much more efficient much cheaper and much better for both patients and doctors. It could also transform our educational systems. It is disappointing that 500 schools will miss out; they might get this advanced form of microwave or other broadband. But the potential for education is massive. 
Lastly and probably of most interest to me is the entertainment potential. We have just wrapped up the Copyright (Infringing File Sharing) Amendment Bill in Parliament. We are seeing more and more Kiwis and people around the world living their lives online. They get their entertainment online. More of the business models into the future will provide massive services through broadband. A couple of weeks after the UN special rapporteur’s report that terminating internet access is a breach of human rights it is great to be having this debate in Parliament. 
I thank the Finance and Expenditure Committee members and in particular the chair Mr Foss who is going on to other things. I congratulate him. I congratulate all the submitters who put a lot of effort into the process. 
In this call I intend to look at four things. I will look at the bill’s history and process. I will look in particular at the forbearance issue: the embarrassing back-down the Minister was forced to undertake and the last-minute compromise that was stitched up. I will look at Telecom which was the winner of the Crown Fibre Holdings contracts. Lastly I will look again at why we are opposing this bill: the missed opportunity. That is what this bill is: a missed opportunity. We are investing $1.35 billion of Government funds—of taxpayer funds—to roll out broadband across the country with our scarce resources at a time when we are borrowing hundreds of millions of dollars a week. We need to make sure that every dollar counts. Unfortunately that is not being achieved through this bill. 
This bill spends the Government’s money on ultra-fast broadband. It also rolls out the Rural Broadband Initiative the telecommunications service obligations and the levy. Although we disagree with the definitions around high-speed broadband we can agree to disagree on that matter. We would have liked to see much speedier broadband and much better uploading speeds. The internet is not just a way of downloading files which most people do currently; the real transformative benefits of the internet come from being able to upload files be they magnetic resonance imaging scan pictures or a file for a teacher to send all over the country for her class. 
When we look at the history of the telecommunications sector in New Zealand we see that it is older than I am. We have seen a sector characterised by monopolies poor services and lack of historical investment. We saw the failed privatisation experiment. I note that Brian Gaynor recently published some research showing that up until 1999 Kiwi taxpayers missed out on more than $8 billion in investment which they would not have if we had adopted a similar service to the Australian Government with Telstra. We have missed out on infrastructure investment and we have missed out on dividends to Kiwi taxpayers. In this sector we have seen a significantly anti-competitive Telecom. I note that Telecom just recently received a $12 million fine for its anti-competitive activities between 2001 and 2004. 
We have to look at why we are even standing in this debating chamber looking at the issue of ultra-fast broadband. The reason we are here is that historically Telecom primarily has dismally and woefully lacked investment in broadband. This was one of National’s major election platforms. Steven Joyce unfortunately is also the Minister of Transport. To answer Trevor Mallard’s question I say that Mr Joyce is more knowledgable when it comes to asphalt and concrete for his “roads of significance to National” than he is about high-tech services such as ultra-fast broadband. He has simply left it too late. He had to get something out of the door before the election in order to realise his election promise. 
He left it too late and because he raced through the process he has alienated businesses and sector groups. We have seen an unprecedented outpouring. We have seen full page ads in the daily papers and television commercials criticising this Government’s poor process and the poor outcomes of this bill. We have seen the Government in an embarrassing back-down only 2 days after the Finance and Expenditure Committee report was tabled in this House. We have seen secretive meetings and a lack of cross-party consultation or consensus reached which is to the detriment of Kiwi consumers and the Kiwi broadband market. 
At the select committee it was a real privilege to hear the submissions and to hear the good questions asked by other select committee members. I heard in the select committee a resounding objection to forbearance from industrial watchdogs consumer groups and the players in the industry. They were resoundingly opposed to forbearance because it was unprecedented. Steven Joyce must be a cowboy movie fan because it essentially sets up a Wild West situation. We heard from the officials that quite simply the Government did not invest an adequate amount of funds to achieve its ambitions of 75 percent coverage so it had to set up an unregulated Wild West - type environment to stimulate investment. We heard from the Minister over and over again— 
Hon Trevor Mallard 
: The member’s got it exactly wrong. He’s got it arse about face. 
GARETH HUGHES 
: Mr Mallard says it is arse about face. Faced with massive objection and criticism from all across the political spectrum and all across the industry spectrum we heard constantly from the Minister that people simply do not understand. Only the Minister knew the ins and outs of the bill! When it came to any question the Minister’s only answer was: “You don’t understand. Go and look at the bill again.” yet we see the Minister’s embarrassing back-downs. 
We saw some good changes in the select committee in relation to the definition of “equivalence”. We also saw the review brought forward to 2016 but the fact is that the review will now be completed over a 3-year period. It is not really a review when the end of the review is the end of the broadband period. In effect it will not be of much practical use if the plan is a lemon and is not working out. 
Forbearance was our major criticism and the primary reason why we changed our vote. In the minority report the Green Party stated: “The Government’s plans for the roll-out of ultra-fast broadband will be significantly compromised by creating an unregulated monopoly in the industry because of a lack of Government investment to achieve its own coverage aims. Unregulated monopolies especially in critical industries like telecommunications undermine the competitiveness of the New Zealand economy and deliver poorer services.” That issue has been picked up too by Sir Roger Douglas and the rest of the ACT Party. 
The forbearance period of 8½ years was absolutely unprecedented in our history and I understand internationally as well. Google was not the primary search engine 8½ years ago; people were still using Ask Jeeves to find a website. How on earth can the Government predict what the telecommunications and internet market will be in 8½ years’ time? It is simply ridiculous. The Minister was absolutely intransigent in the select committee process through the officials that the Government would not budge on this matter until the Government came up against the realpolitik of the Maori Party potentially withdrawing its votes. Two days after the report was tabled the Government backed down so I say good on the Maori Party for forcing the Government’s hand. It was a poor process from the get-go and an even poorer process because the Government backed down and had to stitch up this compromise. None of it went through a select committee process. None of the public got to submit or have their views on these changes heard. 
Essentially the big change replacing forbearance is that the Commerce Commission can regulate pricing on fibre but it is up to the Minister to decide whether regulation is needed. As Clare Curran rightly asked why would the Minister regulate if the taxpayer will have to wear the risk? We have seen no analysis by the Government. This is just continuing the poor process of massive Supplementary Order Papers being tabled in the select committee of secretive meetings and of these embarrassing back-downs and stitch up deals. Thank goodness they have had good sense—and we congratulate the Government—to back down on forbearance and on the regulatory holiday. We now wish for the Minister to back down on the “Holiday Highway” which is a $1.7 billion economic mistake. 
When I look at what the Government has stitched up in the back rooms I fear that the cure is in fact worse than the disease. Essentially Telecom is the massive winner with more than 70 percent of the coverage: of $1.35 billion Telecom will receive $929 million. The vast bulk of those profits will simply flow offshore and overseas shareholders will be the winners. More worrying is that we will see dependence on copper continuing Telecom’s copper legacy which will see Kiwi broadband customers worse off. 
Essentially we have missed a once-in-a-lifetime opportunity. It has been a poor process. We have seen a poor outcome with the copper and it is a poor deal for Kiwis. Kia ora. 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 At the last election the Government blindly promised to invest in New Zealand’s telecommunications infrastructure—in particular in ultra-fast broadband. It was a blind promise because National had no evidence that such an investment was needed or would produce promising outcomes. We are 3 years down the track and there is still no evidence that this initiative will benefit New Zealanders. 
The Telecommunications (TSO Broadband and Other Matters) Amendment Bill sees New Zealand embarking on a modern form of Muldoon’s Think Big project. Under this bill the taxpayer will end up spending $1.5 billion on a gamble. I cannot condone such reckless spending; nor can Heather Roy. The remaining ACT members believe that this was a fundamental election promise made by our coalition partners and will therefore vote for it. This bill is a gamble because we simply do not know whether it will bring any benefit whatsoever to New Zealand. There is a total lack of a cost-benefit analysis to justify spending taxpayers’ money. As is the case with all significant interventions the onus is on the Government to show that the investment of taxpayers’ money is warranted and is beneficial to New Zealand. 
There has never been a wide economic analysis done by Treasury on the bill. This bill has been driven by a political imperative rather than an economic one. The lack of a cost-benefit analysis means that the information is not present for anyone to make an informed decision. To embark on major infrastructural development based on very little economic analysis is reckless at best. In the absence of such analysis it is difficult for any side to determine whether there will be a real return to taxpayers. I ask members which is more extreme: National which is willing to spend taxpayers’ money in times of economic hardship with no cost-benefit analysis or politicians who seek fiscal restraint in times of economic hardship and require sound evidence to justify Government spending programmes. On this point alone I urge the House not to support this bill. 
The reality of the telecommunications industry in New Zealand is that it is a network industry. Therefore it is inevitable that the Government has some role to play in regulation. The issue is whether this bill enhances the goals that we as New Zealanders would like to see in the telecommunications industry. The central goal that we are concerned with is enhancing efficiency in the industry. Does this bill seek to further this end? Put simply it does not. 
There are two major reasons in support of this conclusion. First the Government is once again looking at entering into the telecommunications market with both money and heavy-handed regulation in order to try to actively pick future technology winners with taxpayers’ money. New Zealand and Australia are guinea pigs in going down a Government-determined ultra-fast broadband path. That alone should worry us. There may be a case for Government involvement as it is a network industry but this bill imposes a singular future on a complex industry. 
The central difficulty with Government investment in this area is that there is a need for significant investment coupled with a high commercial risk. The development and use of ultra-fast broadband in the future is not a fait accompli; if it were the risk calculus would heavily favour private investment. It is possible that the next generation of wireless networks could potentially deliver the speed of ultra-fast broadband and on that basis alone some of us do not consider that ultra-fast broadband is necessarily the future of the telecommunications industry in New Zealand. If the Government is wrong and technological developments favour other ways to provide the internet then there will be a large opportunity cost for New Zealand. The opportunity cost is borne out in two ways. First in a static sense $1.5 billion has been invested in a way that has a low return. If the money was left in the hands of private individuals they could seek out more productive investments leading to greater prosperity for New Zealand as a whole. Second in a dynamic sense there is an opportunity cost for future development in the telecommunications industry. 
The bill means that New Zealand companies have been artificially incentivised due to the Government subsidy to invest in the roll-out and development of a technology that may become increasingly irrelevant. This might be particularly true for the Fibre to the Home aspect. This approach will see us down the road of path dependency. Once the network has been built path dependency will ensure that it keeps on being used and developed because the fixed costs will be much lower. This occurs because the set of decisions that one faces in the future is limited by decisions made today. This hinders the long-term development within the telecommunications industry to the detriment of us all. 
Second it may be that this investment will produce low-value return for New Zealanders. It is unclear whether New Zealanders are utilising telecommunications infrastructure to its capacity at present. The Motu Economic and Public Policy Research Trust has done the only empirical work in this area and it concluded that faster broadband speeds are likely to have a negligible impact on the New Zealand economy. Again such investment is extreme on the part of National. The little evidence there is suggests that we should not invest. 
The heart of the problem is that there is not enough information at present to determine whether this project is a waste of money. The Government has moved quickly to implement an election promise and has not been able to produce the evidence that favours support for the proposal. If we are going to spend $1.5 billion I would rather see greater emphasis given to efficiency and competition within the telecommunications industry. For this to result from current policy I suggest we would need to create a situation where we have true open access and the development of our network by new consumers taking up the service. This means that the costs involved are met as they sell to consumers. This would be akin to the way Sky television boxes have been distributed. This would maximise competition without the need for heavy-handed regulation. The Government has said that without a regulatory holiday broadband initiatives will cost at least another $400 million. There is so much uncertainty about the regulatory surroundings that it may well be desirable to spend that $400 million up front in order to get rid of the regulatory holiday and to allow for greater competition in the future. This is a problem that I faced in the steel industry in the 1980s. I found it better to pay $2 billion up front so that we could get rid of the large tariffs that were impeding competition in the industry. 
The second point I make is that we should abolish telecommunications service obligations requirements for Telecom. My first and second points are not mutually exclusive. This would allow costs to fall where they should which would end the practice of cross-subsidisation from urban to rural areas. In addition it would force other technological developments to solve the problem. It is not clear that there is a good case for mandating any form of universal service. As part of this I also advocate getting rid of the Kiwi share and free-calling requirements. 
This bill has not been well-thought-out. We have an election promise and that is what this is all about. In terms of any studies that have been done the indications are that the money will be largely wasted. 
Hon TARIANA TURIA (Co-Leader—Maori Party) 
: 
Tena koe Mr Assistant Speaker Robertson. Tena tatou katoa. I am proud to speak on the Telecommunications (TSO Broadband and Other Matters) Amendment Bill which is ostensibly about supporting a range of measures to facilitate the deployment of broadband. 
The Government has had a very clear goal in sight for the Ultra-fast Broadband Initiative and that is that 75 percent of New Zealand households will be connected. That goal has been advanced for and on behalf of tangata w’enua by the establishment of Nga Pu Waea the Maori broadband group. As a result of that group and the advocacy of the Maori Party we can be assured that marae kohanga reo kura wananga iwi runanga and Maori health and social service providers throughout Aotearoa will benefit from the roll-out of ultra-fast broadband. This is of course exactly how it should be but far too often Parliament falls short of the mark in achieving anything near a Treaty-based solution. This bill has been different and the Maori Party wants to ensure that Hansard records the contributions of Maori and the difference made by having Maori voices at the table.  
The concept that information is power is never more evident than in understanding how the internet can provide us with instant access to information at our fingertips as well as improving communication and connectivity. Under this bill Maori will have access to the knowledge access to the power and access to the connectivity that links us through to an enormous and influential social network.  
So how did it occur that Nga Pu Waea will oversee the roll-out of the Ultra-fast Broadband Initiative and the Rural Broadband Initiative? During the select committee process some very strong submissions were put forward by Maori which helped set a new context. Te Huarahi Tika Trust the Maori Spectrum Charitable Trust paved the foundation for a new approach. To give some background Te Huarahi Tika Trust was incorporated as a charitable trust in 2000 to enable Maori to have a right of purchase over the third-generation spectrum radio frequency being auctioned by the Crown that year. By virtue of that experience Te Huarahi Tika Trust challenged the Crown that it had missed an opportunity to partner with Maori to provide substantially better outcomes for all of Aotearoa with the Rural Broadband Initiative. It also argued that Maori have suffered the consequences of poor regulation in the past and that it has no confidence that that is likely to change. 
The second key submission was put forward by Anthony Royal on behalf of the Torotoro Waea Partnership. The Torotoro Waea Partnership shared much the same view as Te Huarahi Tika Trust. In its view the Crown had overlooked an opportunity to work with Maori in building a better future for our next generations. There were three key platforms that it put forward for consideration. It argued firstly that the Crown should be confident in working with Maori given the extraordinary outcomes that Maori have been able to achieve for all New Zealanders over the last 20 years—an argument that we endorse completely. The second view was derived from a Treaty perspective and it was that the Crown is failing in its obligation through kawanatanga to manage the development of our telecommunications infrastructure for the benefit of Aotearoa. The third plank in the submission was to suggest that the Crown has failed in not developing a vision for telecommunications in New Zealand that has as its primary goal what is best for our communities nor has it involved Maori in developing that vision or communicated it with industry and the public of New Zealand. These perspectives and challenges laid out in submissions provided a vital context to ensure that Maori can maximise the opportunities and that Maori views are represented as the roll-out of broadband progresses. 
So what is the litmus test to demonstrate success in opportunities for all Maori to be digitally literate and connected? What measures will be introduced to effect Maori-targeted initiatives in the broadband sector? Inevitably the increased scope and coverage will have a direct benefit in Maori communities. As a result of this bill 93 percent of rural schools will receive fibre enabling ultra-fast speed with the remaining 7 percent achieving moderate speeds and over 80 percent of rural households will have access to broadband. 
We know that strong connectivity to the outside world is important and that economically it is key infrastructure. But there are some specific initiatives that have come about through the select committee process that particularly relate to and are influenced by Maori input. For a start there is the amendment to clause 18A to require the Minister to consult with interested parties including Maori industry participants the Commerce Commission and consumers when conducting the review. A particularly significant development arising from negotiations with the Maori Party was the lifting of the 10-year forbearance period exempting companies that won tenders from Commerce Commission oversight. Our negotiations to remove the forbearance period will help to ensure lower costs for the end consumer something that is an enormous achievement and will have direct benefits for all our constituents. 
Finally I want to mention the significance of connecting marae to broadband which could over time be crucial to marae retaining their role as the hub of the community or indeed restoring that vital role if lost. If marae become the digital hub particularly in rural communities the results could be really exciting leading to increased participation in the economy improved educational outcomes and ultimately more resilient communities. 
In the community and voluntary sector I have been delighted to secure additional funding of $3.3 million over 3 years for community-based initiatives to increase digital literacy and connection. That new funding builds on the $8.345 million I announced in last year’s Budget that has given life to an amazing collective of over 1000 families who have access to the Computers in Homes programme. The funding will also contribute towards the development of a further Computer Clubhouse which is another fantastic community initiative. 
I truly believe that broadband is crucial to the future of Aotearoa whether it is in greater information technology access in schools linked-up communities or greater connectivity for our marae. I am so proud too that as a result of our negotiations to remove the forbearance period the resulting policy will help to ensure lower costs for the end consumer. The development of information and communication technologies within a country is seen as vital. The Maori Party has fought hard to ensure that Maori will benefit from and be directly involved in shaping an information-based economy. 
We are very pleased to support the second reading of the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. Tena koe. 
DAVID BENNETT (National—Hamilton East) 
: 
 I congratulate the Maori Party on its support of the Government and the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. That shows the true nature of the Maori Party’s desire to have a stronger New Zealand where not only is there economic growth but also there are community linkages we can grow so that we can provide better services to our people and so that our people can have better interaction within themselves and also with the modern world which this technology will enable. The Maori Party is very progressive in understanding that in these very troubled and difficult economic times we must still look forward in a progressive way. 
It is a shame that Labour is not so progressive. It has tried to create a whole lot of issues around this bill and it has failed in doing so. Labour has shown a lack of desire to see this country go forward. Labour has no intent for economic growth or to see New Zealand progress as a country. That does not fit in with the Labour mantra of how it rules by control. It is very interesting to see Labour members trying to pick holes in legislation like this which is in the best interests of New Zealanders and in the best interests of building growth and a dynamic and growing economy. 
I will quote a section from the commentary to this bill. The commentaries of bills are very rarely read by anybody but Labour members pore over these commentaries and spend hours on them in select committees. I want to remind Labour members of what they said on this bill. The commentary states: “New Zealand Labour supports the need to improve New Zealand’s telecommunications infrastructure as it will encourage productivity innovation and export-led growth.” That is what Labour members said in their minority report. They said that improving New Zealand’s telecommunications infrastructure is a good idea that it promotes growth and innovation and that it encourages productivity. Why then can Labour not vote for this bill? Why can Labour not support those things? Labour members say they do but they do not act on it. 
The New Zealand public has seen false rhetoric and no action time and time again from Labour. From a National-led Government with our partners the Maori Party the public gets an action-led Government that delivers solutions and provides that avenue for growth and success. 
This is a good bill. 
Hon Craig Foss 
: Economic transformation. 
DAVID BENNETT 
: It is about economic transformation. I congratulate Mr Foss who led this bill through the Finance and Expenditure Committee and the Minister for Communications and Information Technology as well. Mr Foss has moved on to bigger things but this bill is something I know he took a lot of pride in in the select committee. We had to battle an Opposition that did not want to see New Zealand grow did not want to have this development in our country did not want our schools to be connected by broadband did not want our hospitals connected by broadband and did not want cities like Hamilton to be the first cabs off the rank in getting broadband developed there. 
Labour did not want that. Labour was more interested in playing petty politics and trying to pit people against people in this country when we need to be working together to build a stronger country not trying to pit people against each other as Labour has done in Opposition. It is very sad to see those members having to resort to that in this election year. 
This bill is a good bill. It is good for growth. It is part of the infrastructural development that New Zealand wanted and has received from this Government. The people of Hamilton are very very happy with this bill because we were the first ones to get the contract to go ahead and the Hamilton community will benefit from it. Young people growing up in Hamilton will have the opportunity to access ultra-fast broadband a generation earlier than they would have under a Labour Government. A generation earlier we will have a stronger country and a stronger city of Hamilton to deliver even more economic growth for our future and for this country’s future. Thank you. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The member who has just resumed his seat David Bennett the brains trust of the National caucus has encapsulated the problem with the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. If this is an example of the National Party moving quicker I point out that it took National 2½ years to even think up what its policy was because all it was elected with was a slogan. That slogan said—and I call it to mind—“A $1.5 billion subsidy buys fibre to the home for 75 percent of New Zealanders within 10 years.” 
Clare Curran 
: Here it is. 
Hon DAVID CUNLIFFE 
: There is the card. The problem was that the numbers never did add up. There was never any way that $1.5 billion of a commercial investment seeking a commercial rate of return could have achieved that. When the Minister for Telecommunications and Information Technology Steven Joyce realised he had made an undeliverable promise he went through all sorts of contortions to try to make ends meet. The net result of that was essentially to “sell the law” for a subsidy that none other than Sir Roger Douglas pinned officials to admit was between $400 and $600 million per annum worth of disguised subsidy. 
The point about selling the law is that it has become a habit for this Government. Whether it is Warner Bros Sky City Telecom or CanWest the issue here is that this Parliament is being dragged into disrepute by a Government that has deserted principle and has no clue about policy design. 
I will not go further in speaking about Mr Bennett’s speech because to be honest—and I try to be fair—he made no contribution to the select committee process at all and he has made no contribution of substance to this debate. Mrs Turia however did and I will pick up on a couple of points she has made. The first is that the Maori Party was late to the play in supposedly forcing a concession from the Government on the issue of the regulatory holiday—that bizarre prospect of 10 years with no oversight on fibre by the Commerce Commission. I agree with the position the Maori Party finally took but it voted with the Government at every stage of this bill in the select committee and it made no oral contribution to the debate at all. What I suspect is that the Minister rather like his involvement in the Epsom election for ACT realised that he had got the entire industry offside that everybody other than Telecom was siding against the Government and that he was isolated with a minority of one. I can imagine a conversation when he told the Maori Party to come up to his room and pretend to force concessions out of him so that he could get out of the dead-end street he had got the Government into. 
I suggest that the public think very very carefully before accepting the Maori Party’s protestation that it got this over the line. The Government knew it was in trouble. Nobody at all in the industry other than Telecom supported it. Not even Te Huarahi Tika Trust which was the owner of shares in 2degrees supported it and 2degrees and Bill Osborne in particular argued vociferously against this bill. They made clear that the bill was bankrupt in terms of policy design. Why did the Maori Party not take a stand earlier in the select committee process? Only the rear-view mirror and the voters will tell. I note that the Maori Party is coming a dismal third in the Te Tai Tokerau by-election because it is becoming irrelevant to the national debate. It has become the plaything of the National Party and it is a sad thing to see a party that once held the mantle of some people’s aspiration fall so far so fast. 
Sitting behind Mrs Turia in the Chamber is Sir Roger Douglas and I offer a sincere compliment to Sir Roger. His questions in the select committee were incisive and his minority report—or at least the first four parts of it—are of a very high standard and I reference them for the public’s reading. Unfortunately his alternatives were almost worse than the problem as they were to just leave it to the free market. 
It is here that I have to take a brief trip down memory lane. Before the Labour Government busted the Telecom monopoly we had Telecom taking monopoly rents off New Zealanders and we had low investment high prices and one of the world’s slowest broadband networks. When we busted that market wide open we got double the investment flows New Zealand climbed up the broadband rankings and we had a better competitive environment where all including 2degrees could play. More market means more monopoly I say to Sir Roger—that is the problem we came from. Let us look at this bill to see what it does. The slogan as I said was “$1.5 billion buys fibre to the home for 75 percent of New Zealanders.” But it never could and never would not when that funding was a straight subsidy. That was a commercial investment through Crown Fibre Holdings with a rate of return and big strings attached. The Minister realised when he came into office that it was not a policy at all; it was a slogan. 
Labour had ultra-fast broadband packages up and down the country ready to go. I know because I was the Minister. I had them signed off and sitting on his desk the day that he took office nearly 3 years ago. We have lost a full 2½ years of roll-out because the National Party campaigned on a slogan and the Minister had no policy when he took office. So what did he decide to do after those 2½ years? He came up with an absolute mess an absolute dog’s breakfast of a prescription. I have to say to listeners to the debate that I have never seen a Crown agency testify so strongly against the Government of the day as the Commerce Commission testified—and good on it—against this bill. The regulatory holiday would have taken the commission off the job for 10 years. That is about 5 generations of broadband technology. The great-great-great grandchildren in technology terms would have got a look-in from the Commerce Commission but not until then. 
The bill replaced the old Telecom wire monopoly abridged by our pro-competitive regulation with a new fibre monopoly. It was not Telecom; that name was always a furphy. It was Chorus that had the monopoly on the wholesale and network layers. If the Government wanted a competitive environment it needed a fair and open access regime. We managed to twist National’s arm into getting “equivalence of inputs” which is technical language I know for the public but it means that Chorus will be forced at the wholesale level to at least tell people what the conditions of offer of sale of services would be and that would have to be the same for internal and external parties. It just does not apply to fibre for the first 8 years. What we are left with is a system where the business that owns the network Chorus—“Telecom II”—does not have to tell people how the detail is drawn does not have to offer exactly the same product on exactly the same terms at the layer zero and layer one level of the wholesale network and can screw the scrum under this bill. 
The effectiveness of the regulation is cut to pieces and the Government knows it. It is not an accident. The public need to know that this is a deliberate policy choice made because the Government subsidy fell short so it had to buy the bids by selling the law just as it did for Warner Bros just as it is doing for Sky City and just as it did for CanWest on the broadcasting spectrum fees. It is a terribly dangerous slippery slope the Government is on here where the integrity of the Crown itself is called into question not only by terribly bad policy design but by the deliberate giving away of the public’s protection in exchange for money in the hands of the bidders. It is as crass and crude as that. 
If Government members of the Finance and Expenditure Committee did not appreciate the game they have less intelligence than we credited them with. I would like to think that they do. Concerning Peseta Sam Lotu-Iiga and Craig Foss I say that I know Craig Foss is an intelligent man. I know that he must understand that these bids have been bought. Sam Lotu-Iiga has a so-called business background as well. If he does let him take the next call or Mr Foss and explain to us how the Government has not sold the law to encourage bids in terms of bad regulation. 
Our key concerns were the ridiculous regulatory holiday through five generations the lack of clarity around the open access regime the mandatory averaging of prices the opaque and tilted asset split within Chorus the Commerce Commission exemptions the possible breaching of our World Trade Organization obligations and the question of tax write-offs for Telecom which we will explore in the Committee stage. This is bad law; it will leave New Zealand worse off than before. The next chapter of this debate is a monopoly on content for Sky television and we will come to that later. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 Thank you for the opportunity to talk on this Telecommunications (TSO Broadband and Other Matters) Amendment Bill. We have heard from the Opposition the personal attacks on a Minister the personal attacks on an institution—that is Telecom New Zealand—and the personal attacks on this Government. But what this Government stands for is about fulfilling our election promises and one of those promises was about bringing ultra-fast broadband—100 megabytes per second—to 75 percent of all New Zealanders. 
This bill is part of an overall plan that this Government has. The Opposition lacks a plan it lacks leadership and it certainly lacks the ability to recognise what this bill stands for. This bill stands for infrastructure spend. It stands for bringing about a step change in economic growth. It stands for bringing about the ability of businesses the ability of individuals and the ability of communities to communicate in more effective and efficient ways. That is what it presents. It presents an opportunity for this country for us to better our quality of life to improve our economic productivity and to provide jobs and opportunities for our families and our friends. 
I put it to members that this bill impacts on our communities in so many different ways. For businesses it allows us to better connect to markets to better connect to advisers whether they be professional accountants lawyers or advisers as well as to clients both locally in New Zealand and across the globe. That is what this bill will do for our businesses. For our schools it is about the sharing of content. When I went to one of the schools in my electorate and I saw the communication that went on between 10-year-olds in Tamaki and young kids in America and the United Kingdom I saw the ability of these children to learn not just from their teachers and their peers but also from kids across this globe and across this nation. This bill is about positive things for our schools. 
It also is about improving our health care. It allows X-rays to be downloaded in seconds and diagnostic tools to be readily available where they are not currently available particularly in our rural areas. But we did not hear a word about that from Opposition members because they plainly cannot see the benefits of broadband for our country. It is clear what this Government stands for: it stands for economic growth and it stands for a plan to develop and benefit our communities and families. However the Labour Opposition is against this bill. As we campaign later this year on what matters to New Zealanders let us remind them daily that Labour is against this bill. It is against economic growth. It is clearly against jobs and employment. I do not know how Labour members explain that to their union lackeys and their self-serving union mates but they are clearly against jobs and employment. It was seen with  
The Hobbit 
 it is clearly seen with the convention centre and in relation to this bill Labour has shown that it is clearly against jobs and opportunities across this country. 
Labour is the party of no. It is the party that stands against jobs in our communities. Let the electorate make its decision on 26 November with that in mind. This Government is about supporting the roll-out of broadband. It has been conducted at the Finance and Expenditure Committee in a very timely manner despite the delaying tactics from the Opposition. It is about the Government building for our future with commercial jobs connecting families and friends across this country and across the world and it is about our quality of life. Dare I remind friends across the aisle that this is about productivity and economic growth. I support this bill. Thank you very much. 
STUART NASH (Labour) 
: 
 The last speaker Peseta Sam Lotu-Iiga outlined things that the Labour Party is against but let me outline what the Labour Party is for. Let me outline why the Labour Party has major concerns about the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. The Labour Party is about consultation. The Labour Party is about going out to the people of New Zealand—the taxpayers who will be funding this bill—asking for their opinion and listening to their advice. The Labour Party is about proper process. The Labour Party is about listening to everyone involved in this sector. The Labour Party is about transparency. The Labour Party is not about doing deals in secret. The Labour Party is about putting a plan in place that allows consultation that allows transparency and that allows proper process to be followed. 
The Labour Government was the one that came up with the Digital Strategy which recognised the need for ultra-fast broadband. The Labour Government knew that if New Zealand was to increase its productivity and get to the upper quartile of the OECD we needed to have a decent Digital Strategy. What happened to the strategy? 
Clare Curran 
: It got canned. 
STUART NASH 
: By whom? Mr Joyce canned that Digital Strategy because he had a plan. Mr Joyce had a plan and he decided that he did not care about what anyone else thought or did or about their opinion. “I” said Mr Joyce “have a plan.” I feel a bit sorry for Mr Foss who chairs the Finance and Expenditure Committee which this bill had to run through. I think this bill probably went against every instinct in his body. Mr Foss knows that the people of New Zealand are meant to be consulted but when this bill was rushed through and when Supplementary Order Paper 204 was rushed through I could tell that Mr Foss felt uncomfortable about it. He knew that this was not the proper process to follow. That is just not right. There was no plan and that is just not right. It is simply not fair. 
I know that the New Zealanders who are listening to this debate will remember a time when under Telecom phone prices went through the roof. I remember being a student in Wellington and having to pay $200 to $300 a month in phone charges because of Telecom’s monopoly. The service was dreadful— 
Clare Curran 
: A rort. 
STUART NASH 
: It was a rort. I say “Welcome to this bill.” Once again Telecom has a 75 percent monopoly on ultra-fast broadband. Now anyone who thinks that is good for New Zealand and anyone who thinks that is fair for New Zealanders needs to have their head read. The Government should be ashamed and as is the case with everything else that has gone through the House in the last month to do with the Budget I would love the Government members to call a public meeting and talk to their constituents about why this bill is good. This legislation will result in more cost. 
Labour recognises the fact that New Zealand needs to improve its telecommunications infrastructure. We understand that improved infrastructure will be great for productivity good for education and good for business. We know that; we understand that. That is why we set up the Digital Strategy. But this bill is not the way to do it. This is simply not the way to do it. The Government is struggling to meet one of its major 2008 promises: the one about getting broadband to 75 percent of New Zealand homes for $1.5 billion. 
New Zealanders need to have access to ultra-fast broadband in their workplaces in their schools and in their houses. But we believe that when the Government spends $1.5 billion of taxpayers’ money it had better have its processes sorted out. I get the very distinct impression that New Zealanders do not like the secrecy. They do not like to feel that perhaps a deal has been done behind closed doors because this has been a little bit sneaky. They do not like the fact that they cannot get a regulatory impact statement or even a cost-benefit analysis to hang their hat on and say: “Oh I see; this is why it is done.” They do not like the fact that there is no research or evidence. If this deal was well researched if there was a lot of evidence for New Zealanders to be able to see what the justifications and the rationale were and how the Government will do it then that would make us feel happy. New Zealanders do not like sneaky stuff and this deal reeks of it. This reeks of the sneaky deal stuff. That is why New Zealanders are not happy with this deal. 
It is not only New Zealanders who are unhappy with this deal. I know that Mr Joyce underestimated the industry. He treated the people in it like fools. That has been shown in the way that they have come out hammer and tongs against this bill. In fact they did so to the point where Mr Joyce was forced to pull one of the major platforms of this bill the 10-year regulatory holiday. I do not think that anywhere else in the world—nowhere else in the world—there was anything like a 10-year regulatory holiday. It basically said we should wipe out the market have no policing and Telecom could do whatever it wanted to do. As my colleague David Cunliffe said the Commerce Commission came out against this bill so hard that I am surprised Mr Joyce did not sit down have a cup of tea and rethink the matter. But no he busted straight on through when the Commerce Commission said it had major concerns. That made everyone sit up. 
That is why I think Mr Foss felt so uncomfortable about how this bill was progressing. He knew. He had read the reports he knew the Commerce Commission was not happy about the deal and he saw the way that Telecom sat in front of the Finance and Expenditure Committee and acted with an arrogance that I thought had gone. I thought that arrogance had gone 20 years ago; I hoped it had gone 20 years ago. It filled me with the same sort of dread I used to feel when I received a Telecom bill. What was it called in the old days? I do not know. When I received a Telecom bill as a student I thought: “Oh my God $200.” That was when jugs of beer cost $3. Telecom now has a 75 percent monopoly on ultra-fast broadband. I do not think that is right for the people of New Zealand. I do not think it is good for the industry. 
As I said we accept the need for faster broadband but this deal is only one part of what is needed to deliver a digital transformation strategy for this country. We want to transform our economy. We know that we need to transform our economy by giving New Zealanders better internet access and the best technology and by making sure that every New Zealander has an opportunity to take advantage of that technology. I tell every New Zealander who has a concern about this bill to look at Labour’s minority report and at ACT’s minority report. Labour and ACT do not often agree on things but if people look at the ACT minority report they will see that it also raises major concerns. They should look at the Greens’ minority report; it raises major concerns. I heard the Maori Party speak on this bill but I do not remember its members being at the select committee. They might have been. There is no disrespect but I certainly do not remember a Maori Party member uttering one comment during the process of considering this bill. I ask the question that my colleague Clare Curran has been asking: what was the pay-off? 
This bill was very close to being pulled down because every single party across the political divide across political philosophies had a good hard look at the bill heard the submitters listened to the arguments and said “Whoa we need to pull back on this. We need to think about how we will deliver it because something is not right.” When the Government spends $1.5 billion it needs to do that properly. There needs to be a proper process and transparency. I for one would not have minded if we had delayed this process by 6 months to make sure we got it right. When the Government spends this sort of money on this sort of infrastructural strategy it needs to make sure it gets it right. Sure there is a need and there is urgency but there was nothing that the select committee and this Parliament could not have pulled back on and worked together on. This matter is very important. As I said when ACT the Greens and Labour all say something is not right then perhaps it is not right. David Cunliffe used to be the Minister for Communications and Information Technology. He knows this area inside out. Sir Roger Douglas went through this bill with a fine-tooth comb. Clare Curran went round the world—well to a couple of places—and talked to people in the different areas that have implemented this sort of thing. Everyone came to the same conclusion: this measure simply is not right and is not fair so we should pull back and do it properly. But Steven Joyce had a plan. This is Steven Joyce’s plan. 
AARON GILMORE (National) 
: 
 It is a pleasure to stand and support the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. This Government is all about the iPad generation whereas that party over there who wants to be in Government is all about blackboards. One of the things we are worried about is getting on and giving people what they really need. 
Clare Curran 
: Oh really? Skynet. 
AARON GILMORE 
: That member over there who just blurted out a comment has been wonderful. She pointed out the fact that she criticised us for being too slow. She turned round and said that there were worrying signs of backsliding in time for the Government to tell us how fast it would roll out the $1.5 billion programme. That was in June 2009. Then Ms Curran outlined in May 2011 that Labour consistently attempted to ask for more time to discuss the issues. She said that we were going too fast. One of the problems the Opposition has is the spokesperson on telecommunications. She sat on the Finance and Expenditure Committee and outlined all sorts of problems and issues. We had to delay one of the select committee hearings for 30 minutes while that member got her notes together. The member turned up and what ended up happening? Very little change was put forward. 
The select committee heard submissions over 3 days from a number of different parties from across the country including from a very interesting submitter one Jordan Carter. He is a Labour Party candidate. Mr Carter said the submission process over those 3 days was well done. He is now a Labour Party candidate. He may end up being the telecommunications spokesperson for Labour because he seems to have a little bit more sense and understanding of what operates in this industry than the spokesperson over there who seems to be more worried about her dress sense than anything else. 
Labour members’ understanding of telecommunications and information and communications technology is so inept that they could not even get right the security of their own website in the last few days. First of all they blamed all sorts of things—in fact they blamed me at one stage and a newspaper rang me and accused me of being the leaker of documents. That is outrageous. It was that party’s own website. 
We care about economic growth and activity. We care about getting our telecommunications sector to a position where we can grow the real economy and get things running. Labour does not. The select committee made some good changes. The process was appropriate. It made some neat changes particularly in some of the technical areas of how the telecommunications levy will work which no member from the other side seems to have touched on. In fact we agreed on some of those changes. I am surprised that no member from the other side has pointed that out. There was agreement on a number of aspects of this bill. 
I was in Christchurch yesterday when a major aftershock hit. During that time period telecommunications services went down again and were out for a period of time. To me that outlined the issue we have of the fragility of our telecommunications network. Many parts of the city that I live in in Christchurch have had many problems with the telecommunications network over many years. That was proven again by the processes that were implemented following the aftershock yesterday. I was on the phone doing a live TV interview when the 6.3 aftershock hit. I say that the telecommunications network worked very well and I was very impressed with that. But in our part of town the earthquake recovery work being undertaken at the moment is by contractors of the Earthquake Commission and their own email and phone systems do not work adequately enough to send files back and forth to members. That means they cannot undertake the processing work to assess claims for those people in Christchurch. This bill will facilitate a building and roll-out of systems and a network that will allow that to happen and speed up those sorts of economic activities. 
This is a good bill that brings in and speeds up the processes that we all want to see. It will create jobs and wealth. It will not create anything that members from the other side think. Thank you. 
Amendments recommended by the Finance and Expenditure Committee by majority agreed to. 
A party vote was called for on the question  
That the Telecommunications (TSO Broadband and Other Matters) Amendment Bill be now read a second time. 
Ayes 66 
New Zealand National 58; ACT New Zealand 3 (Boscawen Calvert Hide); Maori Party 4; United Future 1. 
Noes 55 
New Zealand Labour 42; Green Party 9; ACT New Zealand 2 (Douglas Roy H); Progressive 1; Independent: Carter C. 
Bill read a second time.