Telecommunications Amendment Bill — Second Reading In Committee Third Reading 
Telecommunications Amendment Bill — Second Reading In Committee Third Reading 
[Volume:636;Page:7129] 
Tuesday 12 December 2006 
( 
continued on Wednesday 13 December 2006 
) 
Telecommunications Amendment Bill 
Second Reading 
Hon DAVID CUNLIFFE (Minister of Communications) 
: 
 I move  
That the Telecommunications Amendment Bill be now read a second time 
. In speaking to the second reading of this bill let me first thank the Finance and Expenditure Committee which has worked hard to report this bill back to the House within a timely fashion while ensuring that full consideration was given to the public submissions received. The committee also gave careful consideration to structural and operational separation issues as requested and this matter has been dealt with in this bill. May I acknowledge perhaps unusually but with genuine appreciation the constructive roles of all parties including the National Opposition in considering this bill. In my view the select committee benefited not only from able chairing and good inter-party dialogue but also from the presence around the committee table of not one but two former Ministers of Communication the Hon Paul Swain and the Hon Maurice Williamson who had no doubt heard it all before. 
This bill marks a new era in telecommunications in New Zealand. History is being made today. What some people said could not be done is being done. What some people said would not work is being given the opportunity to work and the signs are already strongly indicating that it will work well. This is a landmark bill because we are equipping New Zealand for a new age—a digital age; an age where the smart use of technology will determine our continued prosperity as a country and make economic transformation a reality. 
We are making this history today with a clear firm mandate from the people of New Zealand and I hope from this Parliament. The measures in this bill are a critical part of the Government’s economic transformation programme signalled principally in the telecommunications stocktake announced in May 2006 but also incorporating the outcome of the earlier 2004-05 implementation review of the Telecommunications Act. It is widely agreed that advanced broadband services are key to economic growth and the development of a knowledge-based economy. The Government understands that competitive telecommunications markets are essential to achieving the innovative knowledge-based economy of which we are capable. 
This bill seeks to promote incentives for investment in new infrastructure for both new and existing players. It is also designed to achieve a cultural change in the telecommunications industry. I note that the telecommunications industry has already responded to the reforms in this bill and is working collectively towards a new digital future. 
Let me take a moment to recap why we are taking these measures today. The telecommunications stocktake revealed that New Zealand is in the bottom third of OECD countries across a range of telecommunication services pricing and broadband take-up indicators. Specifically our connection speed offerings were on the average still too slow. Our standard upload speed has been too slow for many users and has inhibited some important applications in the development of advanced services. We are still one of the few countries where restrictive data caps have been the norm. OECD rankings on average per person investment in telecommunications infrastructure placed us 22nd out of 30 nations. Similarly the OECD’s mid-2005 rankings for the level of broadband uptake also placed us 22nd out of 30. Quite frankly those figures were unacceptable. It is just not a sustainable situation for a small smart country to be in. 
Further analysis showed that the status quo was inadequate to boost our broadband performance. It was clear that regulation was needed to deliver the competitive telecommunications markets for New Zealand needed to achieve economic transformation. This bill will provide for stronger competition both on the copper wire network or local loop and in complementary technology such as wireless mobile and satellite. 
This bill amends the Telecommunications Act 2001 to ensure the effective regulation of the telecommunications sector. This is necessary to ensure the Government’s objectives in telecommunications are met for the long-term benefit of New Zealanders. It implements the findings of two separate but related review processes—the telecommunications implementation review and the recent telecommunications stocktake. 
 The bill itself focuses on four elements: extending the range of bottleneck services subject to regulation; enhancing regulatory processes; empowering the commissioner to monitor industry developments and ensure regulatory compliance; and separation measures to promote further competition non-discrimination in wholesale markets and service equivalents. 
Firstly I turn to extending the range of bottleneck services subject to regulation. Regulated services are the heart of the regulatory regime. This bill brings New Zealand into line with international best practice by unbundling the local loop removing restrictions on the existing unbundled bitstream service and clarifying that wholesale bitstream can be purchased without having also to purchase a phone service—the so-called naked DSL. I am pleased to say that submissions to the Finance and Expenditure Committee on these matters were broadly supportive of these provisions. The select committee has made a number of amendments that usefully clarify the detail of these regulated services. 
In relation to enhancing regulatory processes it is important to ensure that the Telecommunications Commissioner can effectively implement the regulation of these services. The bill introduces new regulatory processes and enhances existing processes to ensure that service providers can get effective and timely access to regulated services. In particular the bill empowers the commissioner to set standard access terms and conditions for all access seekers at once rather than on an individual basis as previously required. It enables access seekers to obtain access to regulated services notwithstanding existing commercial agreements for the supply of regulated service. It provides for a quality of access by preventing prejudicial treatment by an access provider towards access seekers who seek regulated terms for services. The Finance and Expenditure Committee received a number of submissions on these matters and made some useful minor amendments that have been made to ensure the regulatory processes in the bill are fair robust and effective. 
In relation to empowering the commissioner the bill introduces a number of key changes to empower the commissioner to monitor and enforce compliance of regulatory obligations. The select committee received submissions on these provisions and made some amendments to ensure that an appropriate balance is struck between the fairness and effectiveness of the enforcement regime. The bill includes an information disclosure regime that empowers the commissioner to require access providers to prepare and publicly disclose relevant information about regulated services. It requires the commissioner to monitor the development and performance of telecommunications markets and strengthens and standardises the enforcement regime to ensure compliance with the regulatory obligations under the Act. 
In relation to separation measures the Telecommunications Amendment Bill introduces an accounting separation regime that will increase the transparency of Telecom New Zealand’s business operations. At my request the Finance and Expenditure Committee also received and considered public submissions on other separation measures such as structural and operational separation. The majority of submissions were generally supportive of a robust three-way operational separation of Telecom to promote competition and equivalence of access to key wholesale services particularly if this could be achieved with the cooperation of Telecom. It is pleasing that the committee has comprehensively addressed these submissions by amending the bill to provide a process for the Minister of Communications to settle an operational separation with Telecom following public consultation. The committee has also included firm and appropriate powers to enable the Minister and the Commerce Commission to ensure that a robust three-way operational separation will be achieved so that others are treated the same or in an equivalent way as Telecom’s own subsidiary in dealing with bottleneck and other wholesale services. The Government welcomes and supports the changes introduced by the Finance and Expenditure Committee and thanks the committee for its diligence and care in dealing with this important matter. 
In addition to the core changes I have outlined the bill addresses a number of implementation issues that have been identified through past experiences with the processes of the Act but owing to time constraints I will not go through all of those this morning. In conclusion the Telecommunications Amendment Bill is landmark legislation that will help New Zealand to realise its digital future. It will facilitate New Zealand’s transformation to a dynamic knowledge-based economy and society underpinned by values of fairness opportunity and security. The bill will promote competition innovation and investment in the telecommunications sector which has been identified quite rightly as a key enabler of New Zealand’s economic transformation. The reforms in the Telecommunications Amendment Bill will speed the realisation of those goals and more. The truly exciting aspect of the bill is the innovation and ingenuity that its presence is already releasing across the telecommunications sector and the broader high-tech community. 
May I take this opportunity to thank all members of the select committee who worked on the bill. I thank the chairman for his good work and thank a very hard-working team of officials and office staff who have really worked very hard to get this legislation through ahead of schedule. I commend this important landmark bill to the House. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 The National Party will be voting for the Telecommunications Amendment Bill. I must say that working on the Finance and Expenditure Committee on this legislation has been an interesting exercise because the bill that Parliament now debates is very different from the bill that the Government first introduced into Parliament. 
This issue is controversial. Really the whole argument around whether the local loop should be unbundled as it is colloquially referred to has been in front of Governments going back at least a decade or more. Members may recollect that a lot of controversy surrounded the introduction of this bill when what the Government proposed to do in order to unbundle the local loop was leaked. Within days of that leak a couple of billion dollars was wiped off the share price of Telecom New Zealand so the Government’s handling of this matter has not been perhaps the most clever that it could have been. Certainly ordinary New Zealanders lost an awful lot of their personal asset—their personal wealth if you like—through the way the Government handled this matter with almost $2 billion I think being wiped off the share value of Telecom New Zealand. I must say that I have no shares in Telecom New Zealand so that did not affect me personally. 
The fundamental issue around the unbundling of the local loop or in other words giving competitors access to the copper wire that links most New Zealanders to their nearest exchange has been controversial for many years. The evidence around the value of unbundling or giving competitors access to that copper wire is mixed. The select committee heard a fascinating submission from one of New Zealand’s foremost academics in the area of competition law who went through most of the evidence from around the world where the local loop had been unbundled and talked about the impact on the uptake of broadband and on access to modern communications technology. I will never forget one of the key issues that came out of that academic presentation to the select committee and it came from more than one person. The bit that sticks in my mind is not so much the detail of whether the evidence clearly showed that local loop unbundling has worked in this country or that country and has not worked in others but the bit that showed that the greatest advances happen when we have competition between communication platforms rather than competition within a platform. 
I say that because I want the Minister to reflect on that point and I want the Government to keep in its mind that this legislation leads mainly to intra-platform competition. The local loop is one platform compared with say wireless technology. So when we talk about the copper wire in the local loop it is a platform as distinct from wireless technology which is another platform. One of the arguments in the past has been that by not unbundling the local loop we would build stronger competition between platforms—between say wireless technology and copper wire—and therefore we would advance access to communications technology most effectively. 
Having said that the Government has made the decision to unbundle the local loop and I hope that a lot of research will be done by our academic institutions on how that affects the advance of communications technology in New Zealand. The interesting issue as we look ahead will be the extent to which it brings focus on to intra-platform competition or in other words competition using the technology of the old copper wire which most telephones and most computers are linked up to compared with advancing the competition between wireless technology and the old technology of copper wire. The answer to that is unknown. 
I stress that National supports this legislation. But we acknowledge in doing so that it is unknown what effect this legislation will have on those two hugely important factors in advancing competition in communications technology: whether it will give too much emphasis to competition within a platform—in other words competition on the old copper wire—compared with competition between platforms. There are of course all sorts of issues around the property rights that Telecom had taken off it but I think those arguments have been and gone and we have to look to the future. That is why we are prepared to support the Government on these moves. But in acknowledging that as we look ahead we must make sure that that issue is thoroughly researched in order to ensure competition is most effectively advanced by this legislation and therefore the access of New Zealanders to the very best communications technology is advanced most effectively by it. 
The interesting thing about the process of this legislation was that the Government made the decision to unbundle the local loop and in the bill that it introduced to try to bring more transparency to Telecom’s operations by requiring an accounting separation so that people could see quite clearly that competitors were being given appropriate access to the local loop. As it transpires the select committee has gone much further than that. The legislation that this Parliament now debates is far further down the track of transparency than the original version of the bill envisaged. Beyond having just an accounting separation this legislation now gives effect to an operational separation of Telecom. 
In supporting this legislation I want to make it clear that National was happy to support the operational separation of Telecom but that National members drew a line in the sand and said we would not support the structural separation or the break-up of Telecom. We insisted that the Government remove that sword from over the head of Telecom because while the threat of structural separation remains in the picture Telecom’s value is severely compromised. I want to make sure that the Government members of this Parliament realise that this bill provides for operational separation not structural separation. The Government must not threaten Telecom with structural separation unless it wants to deprive hundreds of thousands of New Zealanders of the value they own in Telecom. If we threaten Telecom with structural separation we will strip value out of Telecom. 
I want to make sure that Government members who have not been involved in considering this legislation are aware of the seriousness of that issue. National drew an absolute line in the sand there. We will support operational separation but we will not support structural separation. We want members of this House to be fully aware of the potential damage to New Zealand’s biggest company to our major telecommunications company if the threat of structural separation is not taken right off the agenda. 
Let me make it very clear what is meant by operational separation. The select committee has proposed that Telecom should operate in three sections: one being access to its network services the second being the operation of its essentially wholesale services and the third being its other services which include largely retail services. How we were to give effect to that then became a critically important issue Were we to try to write into legislation the detail of the operational separation? I argued strongly at the select committee based on my 9 years’ experience as a Minister about the way that it should be implemented—about the preparation of the operational separation plan. 
There was some debate at the select committee about whether the Minister—in other words the Government—or Telecom should write the separation plan. I argued very strongly personally that Telecom should draft the separation plan because only Telecom knows the detail of how it can be given effect. But the legislation makes sure the Minister has ultimate control over it. The Minister has the ultimate power to make sure the draft plan is written and the Minister can give directions as to what should go into the draft plan. 
Personally I consider section 69AAD “Main requirements for separation plan” and section 69AAH “Preparation of draft separation plan” in clause 32 to be quite well drafted. I take some credit for arguing strongly as to the balance between Telecom and the Minister in relation to those provisions. I think the balance in the bill is good. Given that the decision has been made to progress operational separation I think the way the legislation is drafted makes sense. It has the right balance between the requirements on Telecom and the ability of the Minister to have ultimate control over the process. 
This is major legislation. National happily supports it but we want to make sure that members of the House are aware there are unknown issues as we look ahead. We must monitor the competitive situation to make sure that the interests of all New Zealanders are advanced as far as possible by this legislation. 
SHANE JONES (Labour) 
: 
 Kia ora morena Madam Assistant Speaker. I rise to support much of what Dr Smith has said. However in my case there will be great content and great brevity unlike in his delivery. 
I must say that the Finance and Expenditure Committee formed a collaborative spirit on this bill and we operated between two poles. The first pole was how does a group of legislators effect better competition outcomes and provide a statutory basis for improved competition whilst at the same time not compromising a pro-investment framework. When we were given the bill it followed a long list of events of a particular important nature in relation to the calendar of this House. It followed on from the Prime Minister identifying that telecommunications reform would comprise an important part of the work programme. So it is with particular pleasure that I stand as the chair of our committee having seen the Prime Minister deliver in her speech early in 2006 that the outstanding problem of competition in telecommunications would not sit hovering without being given the overdue attention of the State and now we stand here passing it. 
The officials were of great assistance to our committee. On our committee we are basically generalists. We have had three hefty statutes to shepherd forward and eventually take root in the legislative landscape. The first was the KiwiSaver Bill the second was the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill that we put to bed last night and the third was the Telecommunications Amendment Bill. When I say that we are generalists there is a strong understanding of the importance of getting the balance right between the regulatory stick and ensuring that investors and the business community can go about their activities of pursuing profit because through profit lies rewards for those people who are prepared to invest in enterprises. 
Yes Dr Smith is right to highlight the fact that the value of Telecom shares took a wee bit of a dip earlier in the year but it is unfair to label as the culprit for that dip the policy that was leaked but that was shepherded and brought forward by my colleague Mr Cunliffe. Telecom itself had made a host of investments not all of which yielded profit. I have no doubt in my mind that the impatience in the market as to how well it was doing was also behind the drop in the value. 
But once the bill found its way to our committee we provided ample opportunity for submitters—a number of whom proved to be very raucous—to come before the committee. We even went beyond the call of duty and enabled an academic to present and run the risk of putting us to sleep at about 9.30 at night. This late hour is reflective of the industriousness of this committee. She rates a mention although much of the content of her work did not find a great deal of favour with members of our committee maybe because Bryce Wilkinson that great friend of the market and opponent of anything to do with regulation was her mentor. However her work is referred to in the committee’s report. 
The Internet service providers who are going to really struggle despite the existence of this improved competition framework had an opportunity to be heard. The incumbent had a second opportunity through being given a private hearing. The committee members took a little stick for that but we felt that given the huge amount of commercial worth tied up in the Telecom company the Telecom people deserved an opportunity to speak candidly with committee members and vice versa. Obviously the other players including TelstraClear all had an opportunity and they were challenged by Mr Williamson who asked them whether they were acting and talking in a manner consistent with their parent company over in Australia. Indeed Telecom was asked a similar question as to why it was saying one thing in Aotearoa and another in Australia. 
So in all it proved to be a successful select committee process. I give full credit to the assistance we received from the officials who from time to time have to work with the very creative and dare I say haphazard process when politicians are let loose on new policy in a select committee. But it all came to pass. It is a reasonable compromise. We are confident that competition will flow and investment has not been thwarted. We look forward to lots of the promises that were given to the select committee being fulfilled. We hope we will see an improvement in competition investment and infrastructure. I say to all my fellow committee members that we worked well and we have come up with a reasonable compromise. Have a merry Christmas. Kia ora tatou katoa. 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First likewise supports the Telecommunications Amendment Bill. I am pleased to say that we have total agreement in the House I think. I thank the chairman of the Commerce Committee the officials who guided us through a very very technical process and indeed the Minister David Cunliffe who as the previous two speakers have said allowed us to roam more widely than perhaps was the initial intent and the result is all the better for that. I also mention right up front the new chairman of Telecom Mr Wayne Boyd who grasped rather more quickly than others in his organisation might have that this was a serious matter that Telecom needed to engage in a very serious manner and that it is not purely commercial—there is a huge political component in Telecom given the fact that it alone has access to virtually every house in New Zealand. We as a Government and as a Parliament are demanding that it share that access with others for the benefit of competition—not to share it for free. Telecom in our view now has a chance to make a significant business out of the wholesale department—if we can call it that in simplistic terms—in charging others to access its lines and its technology in order to provide further services and speedier services to homes and businesses throughout New Zealand. 
 I just make a brief note here that we started with the task of unbundling the local loop and spoke about it rarely thereafter. We spoke about a whole lot of other things but in fact that was the object of the exercise and that is what has been achieved at the end of the day. I agree with Dr Lockwood Smith and the chairman Shane Jones that it is a price-sensitive business. It is a sensitive business with regard to the price that is charged for people to enter the loop and it is a sensitive business not only for the current investors but also for the future investors in Telecom. So it was important that all of the legislation pictured in the future be brought forward and put into this bill so that once and for all Telecom could have surety those people whom we want to invest in Telecom would know what they were dealing with we could have investment at a reasonable rate Telecom would not have to put a margin on for unnecessary risk and all those sorts of things. 
The Finance and Expenditure Committee also had to deal with the environment and it had two former Ministers involved in that process which was quite fortunate. One former Minister came from a National administration and one came from a Labour administration. It is good that we had those Ministers there because they both felt in their previous lifetimes as telecommunication Ministers that they had been hard done by by Telecom; in other words Telecom had taken the legislation and proceeded to go around it over it under it and in every other direction and had not lived up to what the Ministers thought were its responsibilities. 
Again I praise the present Minister by pointing out that it was his intent to ensure without going too far that that would not happen again and right through the select committee process there was that understanding. That is where the present chairman of Telecom understood that in order to atone if you like—and that is not quite the word—for sins of the past he had to push his company and his employees rather further than they might have gone on their own. I am sure he did that in consultation with the Minister I know there was consultation with the chairman and that is as it should be. We have a better bill because of all that discussion. 
As the chairman said there was some heartache or grief or aggravation around the fact that we had the chairman on his own in a so-called private session but I think it was that sort of approach to the process that produced some understanding and it was after that meeting that we were able to proceed—quite quickly in actual fact—to a resolution. 
The Minister and Telecom are required to work out all sorts of undertakings together so that the legislation will be completed today. But in fact this is just the start of a process that will now not necessarily go behind closed doors but will go from this Parliament to the Minister’s office to Telecom to the public and to users of these systems. I say that because when a matter goes off our table it is sometimes convenient for us to forget about it but the Minister and his team will really now just start to engage seriously with Telecom. It is through those undertakings and that process that we will have fair competition in this market and we will have the sorts of things that the Minister and the Government envisage for this country. 
We are a smart country. We need to do things in a smarter way than other people but we cannot do that if we do not have the smartest technology to work with and indeed the ability to communicate with our clients overseas when we come to sell things to them. 
So I look forward to those discussions happening within Telecom itself; it is Telecom’s responsibility to come up with the proposals in the first instance and it is for the Minister to discuss that and to sign those proposals off. That is as it should be and I am sure we will have something that will work very very well. 
All through the process we were also aware of a share price and share value and I am pleased to say that at the end of this process when the report was put out to the public the share price of Telecom actually went up and has gone up further since then. I know that the senior management team in Telecom has as one of its aims and objectives the regaining of the lost share value that came about because of fears of what the Government may do to this company. In actual fact those fears have not been realised. The competition that is required by this bill will be fair competition. It will enable Telecom—in our view—to build a wholesale business that it hitherto has not had. I think that share price and that value will be recouped in the fullness of time. We look forward to that. 
NANDOR TANCZOS (Green) 
: 
 Sometimes I feel like I have been bashing my head against a jagged rock. It is not just me; so have all of the greenies environmentalists “natural capitalists” ecologists hippies climatologists—everyone who has been warning that we are living beyond our ecological means. We have been called weirdos freaks and Luddites—and that is just by the members in this Chamber! We have been objects of derision and loathing for saying the things that today are almost self-evident for saying the things that leaders—political leaders of all shades—are now clambering over each other to claim. Today it is easy to talk about climate change ecological degradation the need to protect the environment and biodiversity and the need to safeguard environmental services; the challenge today is what we are going to do about them. 
A good example is air travel. Carbon dioxide emissions from air travel are responsible for 3.4 percent of New Zealand’s emissions and are growing. 
Dr the Hon Lockwood Smith 
: Doug your speech must have been so great he didn’t know what you were talking about. 
NANDOR TANCZOS 
: I ask the member to wait and to be patient. Roughly speaking a kilometre of domestic air travel releases 180 grams of carbon dioxide. So a return trip from Invercargill to Auckland emits half a tonne of carbon dioxide. If we are to start to deal with making New Zealand a carbon neutral country we have to look at how we can change our behaviour with regard to that kind of thing. That means of course doing things like scheduling multiple events on one trip to reduce the need to get on a plane. But also it requires that we maximise the use of communication technologies such as audio conferencing and videoconferencing. One of the things that the Telecommunications Amendment Bill is about is making that kind of technology more accessible to more people more consistently. It is about allowing New Zealanders to take full advantage of those technologies as they develop so that New Zealand can remain economically competitive while ensuring that we are able to protect our environmental sustainability. 
The reason why the Green Party supports this bill—and has supported it from its introduction—is that for us it is all about safeguarding environmental sustainability. It is about future-proofing the New Zealand economy in order that we can survive and thrive as a nation in the new environmental realities of the world that we live in. In my first reading speech I said that if we are to reduce our dependence on fossil fuels and make things like telecommuting an actual reality in the day-to-day lives of ordinary New Zealanders then unlocking the potential of broadband in our telecommunications infrastructure is exactly what we need to do. That is precisely why the Greens see this legislation as vital. As I said it is about future-proofing the New Zealand economy and making it more resilient in the face of such threats as climate change and peak oil. 
If we are to do that a careful balance must be struck between ensuring that the legislation leaves in place conditions that support continued investment in a rapidly changing technological environment and at the same time promoting fair competition and affordable access to genuine high-speed broadband. The previous environment simply did not strike that balance. But of course we have to be very careful that any interventions we make do not cause unintended consequences. The bill as introduced was a very good start but left some matters unresolved. I think the Finance and Expenditure Committee did a very good job in grappling with those issues and coming up with key recommendations. 
 As a result of that work important players in the sector have warmly welcomed the amended bill. The Internet Society of New Zealand has congratulated the Finance and Expenditure Committee on its report back and particularly on its recommendation of operational separation of Telecom’s network under an independent oversight group. The Executive Director Keith Davidson says that having the network separated out from the wholesale and retail arms is absolutely necessary. The network he says is the enduring bottleneck and it needs to be separated. 
The committee gave a lot of thought to how best to do that. It was interesting to hear Lockwood Smith tell us all how National had put the hard word on the Government to make sure that structural separation did not take place. It was very interesting to hear him say that and I think we need to put the record straight. Actually the whole committee was interested in producing the best outcomes. The whole committee looked at these matters with an open mind and heard the evidence. For National to say that somehow its members were the bulwark for Telecom is simply incorrect. In fact if I might say so if it had been left to National we might not have the separation we are now looking at. Its members appeared much more willing to accept Telecom’s strange second proposal with its complexity and its inability to achieve the outcomes that we all agreed we were looking for. 
The bill did not originally require either structural separation or operational separation actually. It called for an accounting separation. Although the committee was careful to avoid conducting a direct negotiation with Telecom about the exact form that that operational separation might take we did outline some of the parameters of it and the process for making a relatively speedy decision. One thing is clear: the need to get the job done so that everyone can get on with it in the new regulatory environment. The parameters that we looked at and recommended include a fixed network access services business unit one or more business units that must provide a wholesale function for all relevant services and one or more other business units—and we are talking about the retail side there. The select committee recommended that Telecom must operate these business units at arm’s length from its other business units and must ensure transparency and equivalence in relation to the supply by Telecom of relevant services. The select committee also recommended the insertion of section 69AAE in clause 32 which defines the term “equivalence” as being “equivalence of supply of wholesale telecommunications services and access to Telecom’s network so that third party access seekers are treated in the same or an equivalent way to Telecom’s own business operations including in relation to pricing procedures operational support supply of information and other relevant matters.” in relation to its supply of certain telecommunications services. 
We did not entirely answer the question of whether we are looking at equivalence of inputs or equivalence of outputs especially in relation to legacy products. The Internet Service Providers Association of New Zealand President David Diprose has said that it “is understandable that Telecom would desire Equivalence of Outputs for its so-called legacy products rather than Equivalents of Inputs. However Equivalence of Outputs doesn’t give the necessary results and can be gamed to Telecom’s advantage. Equivalence of Inputs treating all wholesale customers the same as its own ISP is a key practical requirement to provide competition in the market and to achieve the resultant benefits from end-users.” The Greens encourage the Minister of Communications to require equivalence of inputs and to further ensure that he listens very carefully to the results of consultation with stakeholders during the negotiations over the details of how that operational separation will work. 
I would like to end by making a point that relates to my opening remark that sometimes the Greens feel that we have been bashing our heads against a jagged rock for years. The Green MP Sue Kedgley moved amendments during the progress of the previous Telecommunications Amendment Bill to introduce local loop unbundling. At the time that did not have the support of the House. But as with issues of climate change it has taken a few years for the rest of the House to catch up and even in this case—if not in the case of climate change—to go further than the position the Green Party originally put. I think this report is an excellent piece of work from a select committee working on a cross-party basis and I thoroughly commend it to the House. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Morena Madam Assistant Speaker. Kia ora tatou katoa. I think it is acknowledged that communications technology changes faster than I have been known to run which might be a bit of a surprise to some. Just over a decade ago the concept of a teleconference for example was so remarkable that new regulations had to be introduced to accommodate the advances of the telecommunication industry. I was looking up the Maori Incorporations Constitution Regulations of 1994 the other day as one does and I was struck by the change to the 1969 regulations—clause 126 to be precise—which permits a teleconference of committees of management. 
Rodney Hide 
: I remember it. 
TE URUROA FLAVELL 
: I will give the member a little bit more information. The regulation describes “teleconference” as “The contemporaneous linking together by telephone or other means of instantaneous audio (or audio and visual) communication” of a quorum of the committee. I am sure people remember that. 
Today we are also debating new regulatory provisions and indeed enhancements to the regulatory process. The bill aims to address issues to achieve the efficient and effective regulation of the telecommunications sector. But there are some key differences in time between 2006 and 1994—and indeed 1969—that this bill represents. As I said at the start we are now immersed in a rapidly evolving telecommunications market. Competition introduces new tensions to the industry so that providers are vying to present the best cost options for fixed line telephone services for broadband for mobile and for call network. We are watching a dynamic market develop that has the potential to provide increased capacity to areas through installing high-capacity transmission systems through the laying of fibre-optic cable—and that is all great. 
Whatever package is being put forward the improvements to major fixed and mobile investment projects the capacity of wireless broadband coverage and the growth of wireless technologies have to be good for New Zealand even if most seem to be just worried about losing their mobiles. Increasingly there are more and more New Zealanders who need to benefit from the technology. The census results last week reported that 74.2 percent of households in New Zealand have access to cellphones and for young New Zealanders the percentage is even higher with more than 85 percent stuck to their cellphones. We are really pleased that this bill builds on this emerging momentum and sends a very strong policy signal to the two megaplayers Telecom and Vodafone that they will be subject to a greater degree of Government regulation. 
In this regard there has been failure by successive Governments to step up to the mark. A mass of light-handed regulation has resulted in some fairly dramatic problems—problems that are evident in results such as the fact that we boast the highest mobile rates in the OECD. Well boast is hardly the word I would use when I am presented with my daughter’s mobile accounts demonstrating young people’s prolific and accomplished use of mobile technology. Still we are moving on and moving on is something that this bill enables New Zealanders to do. 
The amendments in this bill seek both to improve the performance of the telecommunications market and to deliver long-term benefits to the end users. It also helps to promote competition. As part of this focus on transparency and access for competitors and in addition to the accounting separation regime proposed in the original bill I see that the Finance and Expenditure Committee recommended the introduction of an operational separation regime for Telecom to promote both competition and efficiency. The Maori Party is happy to support this change and the other amendments put forward by the committee. 
It is disappointing however that the necessary amendments to allow Maori interests to enter the mobile market were not included in this report. The critical issue for tangata whenua interests is around Maori spectrum interests. As I see it the regulatory focus dominating the bill is on fixed line rather than mobile. As I understand it fixed-line communication costs in Aotearoa including ADSL Broadband are much higher than in most other OECD countries and it is artificially kept that way. We know that where there is competition for fixed line-costs customers will achieve lower prices by at least $10 per month and we support that. But the costs for mobile for both new industry players and customers alike are also kept artificially high resulting in the highest rates in the OECD as I commented earlier. I note that a number of the submissions to the Finance and Expenditure Committee pointed out that mobile is not a separate issue. 
But the key issue for Maori is that Maori spectrum interests—Hautaki Trust Econet—are in mobile. Until the mobile issue is sorted Maori are unable to access the telecommunications industry and consequently unable to access the $3 billion mobile market. The focus on mobile is no random decision. Maori consumers are jumping right over a generation of technology; leapfrogging if one likes the copper wire network and going straight to the less capital-intensive wireless technology including mobile phones. Anyone who hangs around with our rangatahi will know that most young Maori are relying on mobile phones—mostly prepay—for their communication needs. That is the way of the future. Young people jump from provider to provider depending on which one has the best offer this month; and that is how it should be. 
Indeed an example in the health sector demonstrates the impact of mobile technology not just as a means of communication but as a site for a new public health initiative. A study reported in the June 2005  
New Zealand Medical Journal 
 concluded that a mobile phone - based smoking cessation programme was extremely successful in recruiting young Maori. The programme used regular personalised text messages to provide smoking-cessation advice support and distraction both in English and in Maori and sourced in Maori tradition; and importantly text messaging was free for 1 month. The messages were brief and bold and to the point flashing concepts such as change courage challenge action goal strength—from one phone to another. I am told it was a very successful idea and the high Maori participation in the trial demonstrates how accessible and acceptable it is to our young. 
Today and every day over a million text messages are sent in New Zealand. The Maori Party cannot therefore let the opportunity provided by this bill pass without noting the importance of addressing the mobile market concerns and in doing so remind the House that such action will allow Maori interest to enter the market. The bill does not deal with the fundamental obstacle whereby Maori still have to buy their way into the telecommunications industry instead of being there as of right as the Waitangi Tribunal recommended. The tribunal’s report on the radio spectrum found that Maori do have an interest in the management rights to go with the radio spectrum and that the two partners to the Treaty should have discussions about them. Yet characteristically the Crown simply proceeded with legislation to give 100 percent control over these management rights. 
We are again in the situation of making the best of a bad deal for Maori. One recommendation that has been put forward to allow Maori to enter the mobile market has been to create the category of specified services from the Telecommunications Act and move the services listed into the designated services category. Specified services are services where the Telecommunications Commissioner can regulate everything except price. Designated services are services where the Telecommunications Commissioner can regulate everything including price. As we noted in the first reading of the bill regulation of everything except price is not regulation at all. 
New Zealand’s digital future relies on cost-effective efficient and competitive telecommunications infrastructure. The Maori Party will support any initiative to ensure that the New Zealand consumer is being delivered a world-class telecommunications service at the lowest cost and highest quality that a truly competitive market could bring. The telecommunications sector has always been one that directly affects the consumer yet it is frequently perceived by most people as big companies profiteering at the hands of the small consumer. Our support for this bill is therefore based on our motivation of championing consumers by indicating a willingness to regulate companies if charges continue to increase unfairly or competition is hampered. We are however committed to ensuring that the impact of mobile technology and the way in which it is revolutionised by business and social interactions must be investigated if we are truly to achieve progress. Kia ora tatou. 
GORDON COPELAND (United Future) 
: 
 The explosion of the Internet and the resulting global connectedness that that has brought to the human race is surely one of the great marvels of our age. I for one as a technophobe from way back find quite amazing the extent to which we can now from any given spot on this planet with access to a computer or mobile phone communicate over vast distances in the blink of an eye. That global interconnectedness is therefore a present reality for New Zealand not only for its citizens in terms of the way they communicate with one another—family and friends—but also of course from the footprint as it were of New Zealand exporting industries and other companies to the rest of the world. 
Our geographical isolation gives New Zealand a comparative competitive disadvantage in relation to the rest of the planet. We are within the OECD officially the nation that on average is the greatest geographical distance from its major markets. Those realities simply mean that when it comes to telecommunications we have to be not at the tail but actually at the head of telecommunication development. We have to be smart we have to be clever and we have to be on the pace if we are to stay in touch and develop our society going forward. That is essentially what this Telecommunications Amendment Bill is about. It seeks to ensure that through better competition better combined technology better investment and smarter writing of programs etc. we have competitive telecommunication services at a price that represents world-best standard. As I say I entirely agree with the Government’s aspirations that we need to be up there in the top half of the OECD when it comes to broadband uptake and other parts of the telecommunication network. 
I would like to touch on a few things that have not been covered by other speakers during this second reading. Firstly I agree with others that the select committee process has been a very very good process. The Finance and Expenditure Committee picked up very quickly and I well remember the submission from InternetNZ what we call the three-box model of operational separation—separation between the equal access network function with an independent oversight group and the separation of Telecom’s wholesale and retail divisions. New Zealand’s largest single company will now be divided operationally into those three separate sections to enhance competition by basically ensuring that any perceptions of a natural monopoly in terms of the local loop etc. disappear and we bring free and open competitive Internet markets to New Zealand. 
I want also to say that I very much enjoyed the submissions to the select committee by the Telecommunications Users Association of New Zealand; it also brought to our attention some very valid points. In the process Telecom was also I think very good. As others have mentioned during the select committee process we shifted ground enormously from mere accounting separation in the bill as introduced to now a complete operational separation into those three divisions. With a lot more work to come in terms of the implementation of that through binding undertakings a draft separation plan and a final separation plan I am sure that will keep the Minister and the officials who expertly guided our committee very very busy in the weeks and months to come. It is vitally important work and I wish the Minister and the officials all the very best in taking this through to completion. 
I want also to convey personally the House’s thanks to the sometimes unsung people in this process and I refer to the Parliamentary Counsel Office and the drafting that was necessary for this bill. We put the drafters under enormous pressure—not only time pressure but pressure in terms of the complexity of what we wanted to see in the bill. Believe you me that is not a straightforward process. I remember that at our first meeting with Telecom its representatives brought along a diagram and circulated it to each member of the committee. I would defy any person who does not have an advanced postgraduate degree in telecommunications to ever begin to explain even one little section of that diagram to a technophobe such as myself. It just demonstrates I suppose the sheer complexity of what we are talking about—the number of permutations and other variations that are possible in this whole area. 
To be able to sort all that through within the very very tight time frame that we were given along with the long hours that the committee put in—including as others have said—evening sessions I think was a great tribute to the select committee process of the New Zealand Parliament. I think this is a demonstration of how important the select committee process is to our democracy. It is not common in other jurisdictions for a bill like this to go through such a process. What has emerged at the other end is I think we would all agree a vast improvement on what entered the process after the first reading of the bill. As I have said however this represents just the beginning of a process that will go on in the weeks and months ahead as those vital undertakings are worked through.  
I want to take a moment to talk a little bit about Telecom and its importance to the New Zealand economy. As is well known the circumstances surrounding the announcement of the Government’s decision to unbundle the local loop were very very unfortunate. There was a scandalous leak of that announcement to Telecom before its formal announcement which was originally planned I believe for the Budget. As a result about $2 billion was removed from Telecom’s value at the stock exchange. I think that was going to happen anyway but it was indeed an unfortunate beginning to the whole matter. But I wish Telecom all the very best for the future. It is important to New Zealand that Telecom remains a strong company. I believe that the bill as presented back to Parliament will allow Telecom to remain profitable and successful going forward. It is not the intention of the bill to bring that to an end. It is very very important that Telecom does because the fact is that the copper wire system we have which Telecom owns in this country is unique and will probably remain unique for all time to come. It is the only copper wire system we have that goes into our rural areas for example. 
I would like to mention particularly Internet services into rural areas. They need to be lifted and lifted significantly if we are to maintain the major part of our exporting base which is still the primary sector in good shape going forward. I believe that Telecom—and probably Telecom alone in the short term at least—is the only company that will be able to ensure that that continues. I know that in Australia there has been real concern that Telstra over there has not kept pace with the needs of the rural areas so I want to put in a plug for that to continue.  
I want also to mention very briefly property rights—an issue that was brought up by a number of submitters. They brought it to me personally because as is known I have a bill before Parliament to introduce property rights into the New Zealand Bill of Rights Act. Can I just say that at no stage was that subject ever brought to the committee by Telecom itself or by the Telecom board. If there was to be an issue about property rights then I would expect it would be taken up at that level.  
I would like to mention also the point mentioned by Te Ururoa Flavell in relation to mobile phone services. It is true that Econet came and made very very strong submissions to the committee and it would be fair to say went on at some length about the fact that Vodafone owned the spectrum and Econet cannot get access to it. I subsequently took the trouble to find out what the situation was and I was told that Vodafone is prepared to sell spectrum to Econet or other companies at any time for exactly the same price Vodafone paid originally and has made this clear to Econet on several occasions. It seems to me that that is a very very fair offer. I invite the Maori Party to look at that very carefully and simply ask why companies do not actually buy some spectrum from Vodafone and get into certain areas.  
I would have to say though that I went to a presentation just last week and of course they are now talking about digital radio digital wireless—this is the new thing that is coming along—and when that happens we will find a whole range of new spectrum opens up anyway. I think this is a temporary hitch. But I say to Econet and to others that are involved in advancing Maori interests in this area to get out there and give it a go and to not sit back with their hands tied expecting some sort of handout because we expect them to exercise the same commercial entrepreneurship as everyone else—something that indeed Maori are very good at.  
So with those few remarks I want to again thank the officials for their service to the committee. I think we have made a very very good start. It is not the end of the journey but it is an important step towards that goal of cheap and competitive telecommunications services for New Zealand—for its families and for its businesses. 
RODNEY HIDE (Leader—ACT) 
: 
 I fear that the ACT party is rising here in the spirit of Christmas and is going to strike something of a bum note. I hear the National Party United Future the Maori Party the Greens Labour and New Zealand First all happily agreeing to this bill yet here we are a party of just two MPs and we are opposed totally to it. I hope that in the time I have available I can persuade others to join with me in voting against this bill to defeat it. I consider it to be a terrible mistake. 
I always remember when I was studying competition policy and economics at Montana State University under Professor Ron Johnson and having explained to me what “blackboard economics” was. It is the idea that we can always pull out a blackboard and come up with an ideal answer to any real world situation that is so much better. We can prove to our own satisfaction for example that if we had just one manufacturer of cars in the world and it made no changes did not compete with anyone and just brought out a new car as technology advanced every 5 years we would gain huge economies of scale because we would have one company producing the cars for all the world. The manufacturer would not have to compete or spend any money on advertising and it would not have to be constantly updating new models and trying to sell them to us because every 5 years it would just bring out a new sedan a new station wagon and a new four-wheel drive. In fact we can prove to ourselves that if that manufacturer did that it could produce a car for just $3000— 
Dr the Hon Lockwood Smith 
: Like a Lada. 
RODNEY HIDE 
:—which would be a tremendous achievement; it just requires the Government to regulate and control the economy. Of course we know that when that happens—and I heard Dr Lockwood Smith call it out—we actually get a Trabant. 
So that is what happens when we go from the blackboard to the real world and this is what so deeply troubles me about this legislation. I have heard MPs saying that telecommunications is a fast-moving industry and that it is so complex that they could not understand the wiring diagram etc. Then they sat around in a committee and decided to order the largest publicly listed company in New Zealand to split operationally as though MPs know best how to run that business. I have heard MPs here today saying that this will be good for Telecom because it will be able to compete in the wholesale market and it will be a good deal for the company. I am afraid that I do not share that optimism. 
The ACT party opposes this bill for the same reason we opposed the Foreshore and Seabed Bill. When members look at legislation like this they should always remind themselves of the principles behind it. I have to say that ACT’s opposition to the Foreshore and Seabed Bill was deeply unpopular with its supporters. I am sure that I am out of step with the vast majority of New Zealanders on this Telecommunications Amendment Bill because everyone wants to sock it to Telecom. We heard from Mr Flavell that his daughter’s phone bill was so high that we should sock it to Telecom. He said that Telecom New Zealand’s prices are high compared with phone charges in other OECD countries so we should sock it to Telecom. But members should understand that this House is doing exactly the same thing with this legislation that it did with the Foreshore and Seabed Bill—we are pinching people’s rights. We are opposing the legal process and that has to be wrong. 
I would beg Mr Flavell not to go down the route that he was advocating in respect of Econet because the idea there is that Vodafone has a monopoly in the mobile network and Econet should be able to piggyback on the back of that. Well I say “No” to that for the same reason that I opposed the Foreshore and Seabed Bill. 
I heard Dr Lockwood Smith say that the Government did not handle it very well because there was a leak. The Government could not stop someone from leaking information on that policy because it was breaking all the rules—one man leaked it. Actually it was not the leak that wiped $2 billion off the value of Telecom shares; there had been lots of leaks and they had not affected Telecom. What wiped $2 billion from the value of Telecom shares was the policy. All that happened was that the leak announced the policy ahead of the Budget and the loss of that share value definitely would have happened anyway. 
I always enjoy listening to Mr Gordon Copeland because he always makes a good contribution and he stands up for property rights. He said that United Future is not standing up for property rights in this case because the Telecom board never raised the matter. But submitter after submitter raised the matter. 
Members should understand what this bill does. There is no doubt in anyone’s mind about the legal position of Telecom and its shareholders. They own the local loop. They own that copper wire. They bought it and paid for it so it is legally theirs. What this legislation does is to take it from them and say that anyone can use it as long as they pay what Parliament or the Minister declares to be a fair price. That is like Parliament opening up Helen Clark’s front porch and saying that anyone can use it whenever they want as long as they pay their two bob. That would be wrong; that would be overturning property rights. It is the same principle with Telecom. 
If we truly believe that there are such benefits to opening up the copper network we should do so in a manner that is principled and that would be to buy it back on behalf of the taxpayers of New Zealand or to pay full compensation. Are we seeing that happening? No. It is a straight case of “take it” with no compensation. Why? The reason is that this House does not believe that the benefits are there and therefore it is not prepared to compensate the shareholders for their loss. This legislation robs the shareholders of Telecom of their investment. That includes little old ladies’ pension schemes. That is what this Parliament has done. It is doing it here today. We heard Mr Flavell saying that Maori are leapfrogging over the copper wire to the mobile network. Absolutely they are! That just proves how competitive the industry is and the future will be wireless and mobile which also shows how competitive the industry is. 
When Richard Prebble was the Postmaster-General or whatever we had in those days which was not so long ago he received a memo from the New Zealand Post Office. Do people remember the New Zealand Post Office? This would have been in the 1980s. The memo was advice to the Minister and it stated: “We do not see much future for the fax machine in New Zealand because we are perfectly served in this country by telegrams.” The New Zealand Post Office recommended against the introduction of fax machines into New Zealand. Can people imagine that happening now? That happened just a little over 20 years ago. That is how far this industry has moved since then and it has done that not because of what the Government has done but because people have invested in New Zealand. 
What this bill does is put a dampener on that investment because people invest in New Zealand now somewhat at their peril. I am not crying doom and gloom over this but I am saying that it does become a factor when people are investing in this small island nation at the bottom of the Pacific. People could put in billions of dollars to build up a Vodafone mobile network and Mr Flavell could get the numbers pinch it from those investors—like we are doing today—and open it up to his mates. That is the danger of this. That is what has happened here. The investment into New Zealand will be somewhat diminished. How does that help competition? It does not. The way to help competition is simple: lower the regulatory burden on business; do not put it up; respect people’s property rights and the fruits of their labour; and have a low flat tax. 
I am proud to be in the ACT party voting against this bill. I am shocked that my colleagues and friends in National are supporting it. They are making a terrible mistake. 
A party vote was called for on the question  
That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to. 
Ayes 119 
New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 2 
ACT New Zealand 2. 
Question agreed to. 
A party vote was called for on the question  
That the Telecommunications Amendment Bill be now read a second time. 
Ayes 119 
New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 2 
ACT New Zealand 2. 
Bill read a second time. 
In Committee 
Part 1 Amendments to principal Act 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I do not intend to take up too much of the Committee’s time on this. There is a matter though that I put in front of the Minister in the chair David Cunliffe. I was reminded of it by Gordon Copeland’s contribution during the second reading which touched a cord with me as a rural resident. The matter relates to rural telecommunications users. 
At the Finance and Expenditure Committee it became a bit of a joke that on my computer at home I have access to the Internet at a speed of 23 kilobytes per second on a typical day. This is so slow that I cannot read PDF files as I am not home long enough on weekends to download the Adobe Reader—it would take more than all weekend to download it and I do not want to leave the computer running when I am not there. So I am acutely aware of the problem for rural New Zealanders. In the select committee we were told by Telecom that if this is not handled very carefully investment in access to the Internet and telecommunications for rural New Zealanders will actually be delayed as the focus will go into areas of higher population. 
A submission that a lot of the select committee members were fascinated by was the one made to us by the Institution of Professional Engineers. What the members of the institution said to us was very significant. They said that unbundling the local loop on its own will not achieve significant improvement of access to high-speed telecommunications. The issue is the physical length of the local loop. It has been discovered recently in most OECD countries around the world that the length of that copper loop is hugely important and that one cannot deliver really high-speed Internet access over distances beyond 1800 to 1900 metres—that is 1.8 to 1.9 kilometres. If one wants to deliver say 5 megabytes per second—remember I talked about 23 kilobytes; five megabytes is many many times faster than that—and one wants to get up to 90 percent of one’s customers with that kind of access a copper wire needs to be of no more than 800 metres. 
I ask the Minister what the typical length of the local loop of copper wire is here in New Zealand. We were told by the Institution of Professional Engineers that to get that kind of average length for the local loop one would need an investment of something like $1.5 billion. If one were to try to deliver it with mobile one would need vast numbers of cell sites. If we want this kind of high-speed access the length of that local loop is crucially important. For rural New Zealanders it is hugely important. From memory I am about 10 kilometres from my local exchange. So far from having 800 metres of copper wire I have 10 kilometres of it. Technologically the ability of this reform to deliver any improvement in access for me is very limited. 
So those are my specific questions to the Minister the Hon David Cunliffe during this Committee stage. What is the typical length of the local loop here in New Zealand? How concerned is the Government about the advice from the Institution of Professional Engineers that local loop unbundling technologically cannot deliver the kinds of speeds the Government is looking for? The length of the local loop—of the copper wire—is hugely important. I am interested to know what the Government proposes to do about that. Will it just be ignored? Is there a plan to somehow ensure there is this kind of investment in local loop technology? Quite clearly with the reform that this bill will bring into being Telecom will not voluntarily make that investment; Telecom will be investing in areas of high population. What will happen to rural New Zealand? 
R DOUG WOOLERTON (NZ First) 
: 
 It is most fortunate that Dr Lockwood Smith has talked about those technological points and has gone through that detail. I want to talk about similar sorts of things but in more general terms. 
In speaking on Part 1 I want to say that this bill allows for competitors to come in and pay a price to access homes and businesses. My concern—and I know it is a concern of Lockwood Smith Gordon Copeland and others on the committee—is that they do not do an excessive amount of cherry-picking. I know that Mr Hide believes in a completely unfettered market but sometimes the market will deliver huge benefits to one portion of the population but virtually nothing to others. I think it is a concern for all of us that we do not have a situation whereby competitors coming into the market just cherry-pick and provide services in the big cities. 
It would do the cause of competitors more good if they could show Telecom the Government and consumers that their intentions are honourable and that they intend having set up businesses in city areas with larger populations at least to attempt to go out and provide some sort of competition in locations further afield—and to our farmers who we know produce most of our exports. I make that point because too often we look at a big company and say: “Hey here is a company that is not performing as we think it should. What can we do about that? We can provide competition because it has not performed as we think it should since its sale as a Government enterprise.” Then we blame it for not doing all of those things. But if we are going to provide that competition—and Mr Hide says that we should—it is then up to that competition to show good endeavours and to seek to do something about our rural environments. 
Sometimes the distance is not that far. The Hon Dr Lockwood Smith has talked about 10 kilometres down the road. I know approximately where he lives but some of the farming areas we are talking about are more intensely settled. For example I come from the Waikato and I believe that if competitors started in an area such as that they could get a reasonable return and provide a service. If competitors cherry-pick and just go after the good dollars in the cities they will do their case some harm. 
Rodney Hide 
: Put up an amendment. 
R DOUG WOOLERTON 
: I am not going to put up an amendment. I do not believe it is an area that should be regulated but I am saying that if those people want to show good endeavours and have the goodwill of customers they will not do such a thing. I will leave it at that. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Chairperson. Kia ora tatou katoa. I will take just a short call to give a brief explanation in respect of some recommendations that the Maori Party has made and put on the Table. I appreciate the discussion with the Minister the Hon David Cunliffe in respect of looking forward and hopefully we will pick this up in the future. 
The amendments we propose are for a very special simple purpose. They allow for specified services to be reclassified as designated services. I pointed out in the speech I gave not long ago that designated services are services where the Telecommunications Commissioner can regulate everything including price. However specified services are services where the Telecommunications Commissioner can regulate everything except the price. We say that the regulation of everything except price is not actually regulation at all. We make a recommendation to extend the ability to regulate on price and to include not just fixed lines but also mobile services particularly roaming and relocation in order to open up that particular door. 
For Maori to be able to enter the mobile market these changes are necessary. I simply ask the Committee to give these recommendations consideration as we go through this process. They are spread throughout Parts 1 and 2. Obviously one piggybacks on to the other but that is the general gist in respect of our recommendations. Depending on how things go we would be prepared to pick up these recommendations and enter into discussions with the Minister in the future about this. Kia ora tatou. 
Hon DAVID CUNLIFFE (Minister of Communications) 
: 
 Like other members I do not intend to take much of the House’s time here but I note Mr Flavell’s submission that he wishes to see the immediate designation of mobile co-location and roaming. These two services are currently specified under the legislation which means that they are under regulatory scrutiny but under which no price is set in regulation. The Government could not support amendments to the bill on that matter at this time. There is a very good reason for that. The reason is that the Commerce Commission currently has those two services under review and out for public submissions in a schedule 3 process under the Act. It is due to report on that next year. 
It may well be that there is an element of truth behind what Mr Flavell is saying but that is a matter for the due public process to ascertain. It would be to undermine the role of the commissioner I think for this House to legislate over the top of that process. Maori Party members know that my door is open if they wish to make submissions on that matter. Indeed they could also make submissions to the commissioner. 
The question was put that the following amendment in the name of Te Ururoa Flavell to Part 1 be agreed to: 
to insert the following new clause: 
7ANew Part 2 heading substituted 
The heading to Part 2 is repealed and the following heading is substituted:  
Part 2Designated Services 
. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Te Ururoa Flavell to Part 1 be agreed to: 
to insert the following new clause: 
9ANew Subpart 2 heading substituted 
The heading to Subpart 2 is repealed and the following heading is substituted:  
Subpart 2Determinations for Designated Access Services 
. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Te Ururoa Flavell to Part 1 be agreed to: 
to insert the following new clause: 
9BApplication 
Subsection (1) of section 20 is repealed and the following subsection is substituted: 
(1)An access seeker or an access provider of a designated access service may apply to the Commission for a determination of all or some of the terms on which the service must be supplied during the period of time specified in the application. 
Amendment not agreed to. 
The CHAIRPERSON (H V Ross Robertson) 
: The remaining amendments to Part 1 in the name of Te Ururoa Flavell are out of order for they are inconsistent with the previous decisions of the Committee. 
The question was put that the following amendment in the name of the Hon David Cunliffe to clause 55 be agreed to: 
to insert in paragraph (ce) of section 157(1) after the words “procedures or” the word “minimum”. 
Amendment agreed to. 
Part 1 as amended agreed to. 
Part 2 Consequential amendments and transitional provisions 
The CHAIRPERSON (H V Ross Robertson) 
: We have some amendments to Part 2 in the name of the honourable member Te Ururoa Flavell and I have to advise the Committee that they too are out of order because they are inconsistent with the previous decisions of the Committee.  
The question was put that the following amendment in the name of the Hon David Cunliffe to clause 64 be agreed to: 
to omit the words “accordingly to meet” and substitute the words “according to their”. 
Amendment agreed to. 
Part 2 as amended agreed to. 
Schedule 1 agreed to.  
Schedule 2 agreed to.  
Schedule 3 agreed to.  
Schedule 4 agreed to.  
Clauses 1 to 3 
Clause 1 agreed to. 
The question was put that the following amendment in the name of the Hon David Cunliffe to clause 2 be agreed to: 
to omit subclause (2) and substitute the following new subclause: 
(2)The rest of this Act comes into force on 22 December 2006. 
Amendment agreed to. 
Clause 2 as amended agreed to. 
Clause 3 agreed to. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon DAVID CUNLIFFE (Minister of Communications) 
: 
 I move  
That the Telecommunications Amendment Bill be now read a third time 
. Today is a landmark day for telecommunications in New Zealand. It is a day on which we see the most significant change in the legislative and regulatory framework since Telecom New Zealand was privatised nearly two decades ago. As such it is appropriate at the third reading of the bill that we reflect on where telecommunications policy has come from what role this bill plays and where it is heading henceforth. 
This bill is a central part of the Government’s package of measures to assist the New Zealand telecommunications sector to catch up with leading OECD countries and to keep up once it is there. Combined with the Government’s broader information and communications technology and economic transformation programmes this bill will promote and enhance competition in telecommunications markets for the long-term benefit of New Zealanders. It will facilitate innovation and investment in telecommunications infrastructure and services and it will contribute to New Zealand’s transformation to a dynamic knowledge-based economy and society underpinned by fairness opportunity and security. 
It will also pick up the theme introduced by the Green Party of course. Advanced telecommunications will make a contribution to environmental sustainability as well by creating new opportunities to telework and teleconference and reduce the burden of travel on our environment. So it is all good. 
Information and communications technologies are recognised internationally as fundamental enablers of economic social cultural and sustainable development. If New Zealand is to succeed on the world stage we simply cannot afford to fall behind in adopting advanced information and communications technology. New Zealanders are hungry for the advances and benefits that information and communications technologies can bring and as a country we have shown on many occasions our capacity to adopt adapt and benefit from technological innovation. The Government recognises the importance to New Zealanders of information and communications technology. New Zealanders have made very very clear in many opinion polls their support for the reforms being carried through the House today. 
The Government’s policy framework was laid out in the Digital Strategy released in April 2005. The Digital Strategy emphasised the importance of progressing in parallel the three key enablers of information and communications technology—connection confidence and content. Eighteen months on we can see that that strategy has been a success. Broadband Challenge the Community Partnership Fund and a range of other initiatives have been launched under the strategy but today we tackle those key connection issues that if not resolved become the bottleneck on the achievement of the broader strategy. 
So it was that in November 2005 I launched the stocktake review of telecommunications which reported on 3 May to the public. It is probably appropriate at this point to note that in the second reading debate a point was made by a member that the release of that review was under less than desirable circumstances. I agree with that point. Nobody was more shocked or annoyed than I was that a messenger in another department would see fit to breach his employment obligations and transmit a Cabinet paper to a member of the market. That having happened the Government’s obligations were extremely clear. Upon receiving legal advice we knew we had to make the same information available to the whole market—which we did—after the New Zealand market was closed. That was as has been proven the appropriate step to take. As other members have said any reactions in the market place would have been for a wide range of reasons including the consideration of previous investments by the incumbent and factors such as the economic rents embedded in the market up to that time. 
The public and the sector on the basis of submissions have very broadly supported the telecommunications stocktake the main findings of which were as follows. Historically New Zealand was and has been up until now in the bottom third of OECD countries across a range of telecommunications services and pricing and about 3 years behind the pack. A factor in our poor broadband performance was the lack of effective competition and we needed to fix that if we were to get the broadband we needed at prices the public could afford to facilitate consumers’ demands and our economic growth. I note that Doug Woolerton in his second reading speech noted the need to set right what had been wrong in the past including issues of unfair competition in the sector and that has been recognised by a range of people. 
The Green Party contributed to the debate by pointing out that here was one of those excellent opportunities to do good for the environment good for our people and good for the economy all at the same time. We appreciate that party’s support and we appreciate the Maori Party’s support for this bill. That party knows that the bill is good for its people and for other New Zealanders. Its members raised some important issues about mobile and a process is already under way to address those issues. I think we need to respect the proper institutions that are conducting that process but my door is open to them. 
Both New Zealand First and United Future raised the issue of the important balance that is required between sustaining investment in this sector and creating fair competition for high-speed broadband. This bill is extremely carefully crafted in that regard. It follows the OECD and European Union mainstream approach called the ladder of investment that gives a reasonable discount for the entry-level services around the unbundled bitstream through something called retail minus pricing. The bill going beyond that to local loop unbundling then gives much deeper discounts through cost-plus or total service long run incremental cost lyric pricing which means there is a strong incentive for entrants to really enter the market put in some of their own gear and invest in their own networks thereby building stronger and stronger competition as their customer bases get a foothold. That is what has worked internationally and that is what will work in New Zealand. The early evidence since 3 May is that there have been an increased number of investment inquiries in the sector increased coverage of new players and new technology in the media and very strong support for the direction the Government has shown. 
In the second reading debate the ACT party the only lonely party to oppose this bill raised the old saw of property rights. I think this is an opportunity to debunk that approach once and for all. I commend the Finance and Expenditure Committee which considered that issue. All parties considered the issue very carefully and in some detail but ACT said at the end of a long passage in the committee report that it disagreed. Why was that? Well firstly I think the ACT party has been a bit disingenuous in saying that this is about old ladies’ pension plans. The fact is that there is a very broad shareholding for the incumbent—but that is not the issue as most of it resides overseas. The key issue is that regulatory risk is built into the share price of any incumbent telecommunications company anywhere in the world. A telecommunications company has to manage that regulatory risk by not playing too hard in the market to the exclusion of others. That is what Mr Woolerton was referring to when he talked about this bill marking a point of atonement for the past and creating a fair pathway to the future. 
Secondly shareholdings change hands many times. The shareholding of that company has changed hands many times since it was privatised and as those transactions occur the risks need to be assessed by willing buyers and willing sellers—and they have been. Clearly at the time of privatisation the Government’s right to regulate the sector was underlined and that has not changed. So we have discussed and I think dealt with those issues. We have dealt with investment issues going forward. 
So what happens now? When this bill is implemented the next stage as set out in the report from the select committee will be a process of negotiating undertakings where Telecom in consultation with officials will draft undertakings that will be worked through with the Government through the Minister. We will end up with an enforceable binding robust three-way operational separation that will require non-discrimination in wholesale markets and fair access to bottleneck and wholesale services. It will also underpin the other pro-competitive disciplines in this bill. 
This has been a long and eventful road. The day is a very important day for New Zealand. It is not just about local loop unbundling and it is not just about any separation issues; these are elements of a thoroughgoing raft of reforms that are part of a broader coherent digital strategy that will bring the benefits of information and communications technologies to all New Zealanders at the prices New Zealanders can afford. 
In closing I pick up on one important set of issues that remains to be further progressed and that is of importance to many parties here. It concerns rural telecommunications services. This is not the end of the road for the rural sector; it is the starting point for a new wave of analysis and investment in rural services. We have a rural strategy under way now we are reviewing the telecommunications services obligations and this Government pledges to ensure that rural New Zealanders will also benefit from the reforms going forward. I commend the Telecommunications Amendment Bill to the House. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 This Telecommunications Amendment Bill that we will pass today is very important legislation. Therefore we need to be very mindful about its full ramifications and honest about what we hope it will achieve and what it may not achieve. National supports the legislation despite the fact that the evidence is not all one way on it because we too hope it will achieve significant benefit for many New Zealanders in improving their access to telecommunications technology. 
But we should acknowledge that the evidence is not all unequivocal. One of New Zealand’s foremost academics working in this area gave a very extensive submission to the Finance and Expenditure Committee. That academic Bronwyn Howell from Victoria University is unquestionably New Zealand’s leading academic in this area. Some people may disagree with her views but she is certainly one of the leading academics in this area. She made a couple of points to the select committee that I want to make sure are on the record in the House. She pointed out to us that our performance in the past has not been abysmal. She said that evidence showed that New Zealand was in a leadership position in the OECD in terms of Internet uptake and usage over the years from 1996 to 2006. She said that far from New Zealand being the dunce in the class it was actually leading the OECD in Internet uptake. 
She also pointed out that at a recent conference in Europe where the issues of local loop unbundling were being looked at most papers showed that local loop unbundling had caused some quite perverse outcomes and results and often chilling effects on infrastructure investment. She said that European Union data was showing that there was very little impact of unbundling on broadband uptake. I do not think we should necessarily be too troubled by that but we should note it because we should not expect this legislation to produce unrealistic outcomes. 
The very last thing that the Minister himself addressed in his contribution to this third reading debate was the position of this kind of infrastructure on rural New Zealand. I was sad that he did not respond to my question during the Committee stage because the Institution of Professional Engineers raised this issue with the select committee. I think it would be fair to say that all members of the select committee were quite impressed by the submission of that organisation. Let me make it very clear—members of the organisation supported this legislation. It is not that they were not supporting it but they made very clear to the select committee that we have to be honest about what it will achieve. 
They pointed out—as I mentioned during the Committee stage—that in fact there is a limit to what copper wire can deliver in terms of high-speed Internet access or high-speed broadband access. They pointed out that the maximum distance—technologically—from an exchange where high-speed access can be delivered is 1.8 to 1.9 kilometres. I asked the Minister what the typical local loop length is in New Zealand. Sadly the Minister did not respond to that. 
The Institution of Professional Engineers also pointed out to us that if we want really high-speed such as 5 megabits per second we needed a copper wire length of no more than 800 metres—that is under a kilometre. I pointed out that at home I am a good 10 kilometres from my local exchange—and most of rural New Zealand would be that far from their local exchange. I am not that far from local townships; I am not in the backblocks of beyond. I have a State highway going past my front gate. I am only 150 kilometres from the biggest city in New Zealand—Auckland. So there are very serious issues about rural infrastructure because one of the major parts of our economy—the primary sector of our economy—is increasingly dependent on telecommunications. This is a serious issue. 
When Telecom representatives were in front of the select committee and were asked about what this would do to the balance of Telecom’s investment they were pretty honest about it. They said it would see the company probably focusing more investment in the more high dense population areas. This is what my colleague from New Zealand First Doug Woolerton who was on the select committee expressed as a concern of his during the Committee stage. He hoped we would not see the major investors like Telecom cherry-picking—to use Mr Woolerton’s term. There is nothing in this legislation to prevent that. In fact Telecom was sufficiently upfront and honest with the select committee to acknowledge that probably there will be a bit of a shift in balance of investment. 
That is why I am deeply troubled by the position that rural New Zealand remains in following the passage of this legislation because we know that the length of copper wire servicing much of rural New Zealand will technologically not deliver high-speed access. Although I am encouraged that the Minister referred to that in the final moments of his third reading address just now I think the Government needs to make sure the impacts of this legislation are carefully monitored. Although I know that some members disagreed with the evidence of Bronwyn Howell I think it would be foolish to ignore totally what she said. 
If members took nothing else from the extensive evidence she put in front of the committee it would be that there is a need to monitor outcomes because any regulatory legislation like this can produce unexpected outcomes. We know from experience in Europe that some of the outcomes there where local loop unbundling has been put in place have been unexpected and not all as desirable in those countries as those who had been advancing the legislation had hoped. 
I make it clear that National supports the legislation. We hope—and we expect—that the outcomes from this legislation will be positive for much of New Zealand. But we also have to be honest about what is driving 5-megabit access to the Internet. Much of it is not data handling much of it is actually entertainment. Much of it is actually the desire to be able to access video on Internet and that is what requires that kind of broadband access. 
Rodney Hide 
: Porn! That’s what the farmers want. 
Dr the Hon LOCKWOOD SMITH 
: I hear my colleague Rodney Hide calling out there and we know that one of the countries in the world with the highest broadband uptake per head of population—one that stands out—is South Korea and we all know what has tended to drive that uptake in South Korea. It is certainly not business; it tends to be entertainment of a particular kind. 
Darren Hughes 
: What is the member talking about? 
Rodney Hide 
: Darren’s too young! 
Dr the Hon LOCKWOOD SMITH 
: Rodney Hide says Darren Hughes from Labour is too young to know what is driving some of this Internet access demand. I do not want to waste my time on that kind of debate. All I want to say is that National supports this legislation. 
We believe that one of the very important requirements that National wanted is in the bill. It has gone into new section 69AAC—in the interpretation of what operational separation means. It was National members of the select committee who got in paragraph (b) that states operational separation “does not include a requirement that any business unit must be operated by different owners:” That removed that sword of Damocles if you like from over the head of Telecom—that this legislation is not a forerunner to full structural separation. We must respect the fact that much of the serious kind of investment that we need in telecommunications infrastructure in New Zealand will come from Telecom—our biggest telecommunications company—and it will not be able to deliver that for us if that threat lies over its head. I am pleased that that bottom line was put in the legislation. 
I think the balance of legislation is sensible but National remains troubled about the position rural telecommunications infrastructure remains in because all the indications tend to be that this legislation will result in greater focus in the higher populated areas not our rural areas that are so important to our economy. I hope the Government takes on board the need to monitor the outcomes of this legislation. National will be voting for it. 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First will be supporting the Telecommunications Amendment Bill and enthusiastically so. But I think it is important to point out the failures that have led to the need for this legislation. 
Rodney Hide 
: Show some enthusiasm Doug. 
R DOUG WOOLERTON 
: I reassure Rodney Hide that I am highly excited at this point. This is about as excited as I get. So leading up to Christmas members had better take a good look because it will have to last a couple of months. If I get any more excited than this I will not be responsible for the consequences. 
However in speaking to this bill I say that this legislation is necessary because of a failure and that is sad. New Zealand First has said on many many occasions and made issue of the fact that we should not be selling our major infrastructure in New Zealand—and we have sold it. In this bill yet again we are having to address an issue where the market has not delivered what it should have. To me that is sad. I think it is unfortunate that Telecom has not reacted to its customers in a proper manner. It has not kept up with technology it has not delivered what its customers were expecting it has not delivered what the Government of this country was expecting and this legislation has become necessary because of that. 
In fact when it was first announced that the Government was to become involved in this issue a man called Rod Deane who was the chairman of Telecom at the time announced that he would resign forthwith because he would not have anybody messing around with his company. Oh dear! I am so sad and sorry about that because that man more than any other is responsible for this legislation. He focused on one thing and one thing only—that is a return to his shareholders and dare I say it to himself. This company is not known for low salaries. This company is not known for diligence as far as the customer is concerned. I hope and I believe that with a new chairman at the top of this company we will have a company that is responsive to the market to what we in New Zealand expect out of a telecommunications company and to best world practice. 
At the end of the day there are no surprises in what has been done to Telecom. I suspect—and the sharemarket shows that this is true—that in fact the market was expecting far more to be done to Telecom than has been done because the market has gone up since these changes have been announced. These changes were based broadly on the British Telecom model. They were based broadly on changes that had happened in England. The Minister and his team have brought them to the House and put them before us for consideration so we have not been dealing with an unknown quantity here. 
The previous operators of Telecom could have put these changes in place in their own time frame and at their own speed and they could have had them up and running today. In fact one of the requests from Telecom to us was that we did not insist on expecting too much of what it calls its legacy platform or legacy services because the company will have to renew just about all of its technology throughout the country to deliver on the issues required by this legislation. If the previous chairman had been insistent on a free-market model that was actually delivering to the public that renewal would have been done progressively out of profits and retained earnings as the years went by. So I say that this company previously has not been run as it should have been—never mind the customers; it has not been run in a responsible manner in order to take care of reinvestment in the sort of technology this legislation requires. 
Without question Telecom should be New Zealand’s leading technology company. It is the wish of the Finance and Expenditure Committee and I know that it is the wish of the officials and the Minister that it will be so. But sadly it has taken this Parliament to drag this company yelling and screaming into the 21st century and that is sad. It was not until we had a closed-door session with the chairman of the company—to whom I give credit; I have named him several times now and I do so again—and said that he had better engage in this process or otherwise the Government would do it for him. And we had a resolution very quickly after that. 
I commend the chairman for that because he saw what his predecessor and the executives of that company had not seen previously—that the Government had the resolve to make changes because it would not put up with a second-rate telecommunications industry in New Zealand. As has been mentioned by other speakers with our isolation from markets and our absolute need to communicate with them on a daily weekly and monthly basis telecommunications are essential. We have to be not just as good as the rest of the world but above and beyond the standard of the rest of the world. This company should be—and I hope will be—a company with best world practice; a model of excellence. As I believe in a collaborative spirit that is the hope I personally have and that is the hope the select committee has. I know the Minister has that view and this was the mood in which this legislation was debated in the select committee. 
I must say that in view of what the public has seen in the newspapers in regard to this Parliament and some contentious issues that have flowed from it I wish that the public could have seen the collaborative efforts that went on in the select committee over this legislation—and I know that the same is true for other select committees. It has been a collaborative issue from the people in the select committee right through to the Minister and officials and it has been a lesson indeed. I think the outcome will be excellent. 
SUE KEDGLEY (Green) 
: 
 I will speak just briefly to say how delighted the Green Party is at the passage of this Telecommunications Amendment Bill because I have not been working on it in the Finance and Expenditure Committee. But our only regret is that it has taken us so long to get to this point. I cannot resist mentioning that when we were considering the original telecommunications legislation which established the Telecommunications Commissioner—I think in about 2002—the Green Party campaigned and indeed introduced amendments to this House to unbundle the local loop but we had absolutely no support from any other party in this House. So it is great to see that now everybody else has caught up with the Greens and that everyone—[ 
Interruption 
]—except for Rodney Hide and the ACT party—is now supporting what we were advocating and campaigning for years and years ago. It just shows that once again the Greens are at the forefront and that we come up with ideas that at the time are dismissed as being radical but a few years later are accepted as being absolute necessity and common sense. 
We pointed out then that New Zealand along with I think Mexico were about the only two countries in the OECD that had not unbundled the local loop. We pointed out that telecommunications are so utterly vital. They are the new highway in the 21st century; I think they are what railways were to the 20th century. But particularly for New Zealand with this technology we can transcend our geographical isolation and so forth. We need to be right at the forefront at the leading edge of this technology and it is incredible that we have allowed a telecommunications monopoly—namely Telecom—to hold us back for so long. Telecommunications are a key strategic asset in New Zealand that is so vital for our economy so why did we sit around and allow Telecom which inherited a monopoly in telecommunications to exploit that monopoly to hold back other businesses to hold back on innovation and to do everything in its power over many years to retain that monopoly? Instead as the previous speaker said the company could have been at the forefront and it could have embraced change and innovation so that it did not get us to this point. 
The Greens really want to give our support to this bill and also underline the fact that telecommunications are vital in terms of their delivery of environmental benefits. If we finally do start telecommuting on a larger scale we will not need to build new motorways. Telecommunications have huge benefits in terms of the environmental perspective as well as in terms of enabling New Zealand to be competitive in the international world. At long last Parliament has caught up with what the Greens have been campaigning for for about 6 years. We are absolutely delighted to support this bill and our only regret is that it has taken us so long to get to this point. Thank you. 
RODNEY HIDE (Leader—ACT) 
: 
 I do not want to rehash what we covered earlier but I have to say that one of the things that must concern us as a Parliament is that we know that one regulation invariably means more regulations. I heard Dr Lockwood Smith say that this bill has removed the sword of Damocles from hanging over Telecom when in fact after listening to that member and to Mr Doug Woolerton and after watching the Minister assent to their comments I believe that the sword has been put there again. 
Why do I say that? I say that because the first concern raised by Mr Doug Woolerton was about cherry-picking. This is the idea—Heaven forbid—that companies and investors would put their money where they could get a return! Is that not what we expect companies to do? Is that not how we expect them to manage their resources? No that now becomes in the language of this Parliament cherry-picking! Mr Woolerton wants to say that companies should invest their money where the costs are so high that they cannot get a return. Because he lives like Dr Lockwood Smith in a beautiful part of New Zealand down 10 kilometres of copper wire he says everyone else should have to pay for him to have the access that people can get in downtown Auckland. Mr Woolerton says that Telecom should carry that cost so should the users and shareholders or otherwise it is cherry-picking. 
 I was stunned to hear Dr Lockwood Smith of the National Party concur with that—that somehow this Parliament is going to force people to put their investments in that other place. I watched the Minister nod when Dr Lockwood Smith said National would be monitoring the outcomes of this legislation and I asked myself what we will do if the outcome is not what we expect it to be—which will surely be the case. What will we do if the outcome is less than we expect? It will surely be that. And what will we as a Parliament do if Dr Lockwood Smith cannot download where he lives on his beautiful farm at 5 megabytes a second for his entertainment needs? What will we do then? Well I suspect that in a couple of years’ time we will be back here beating up Telecom again for not doing what Parliament expects it to do. 
I say to members in this House that we are making a terrible mistake when we try to regulate for outcomes when we split up a company and when we pinch its property rights because that is what unbundling is all about. 
I have a lot of respect for Mr Doug Woolerton. I know he has spent a lot of time milking cows and contributing to this country and I know how excited he was when speaking to this bill. I have never seen him as animated as he was then. In fact I wanted to give him some pills to calm him down because I thought that in his advanced years as a member of New Zealand First he might not be able to access a senior card to the full extent of his entitlement. Mr Woolerton was excited beyond all belief and then went on to make some extraordinary statements. I think in his excitement he became carried away with his rhetoric. He suggested that somehow Telecom had not invested enough that somehow it had not done enough in the way of technical advance and that somehow it was not running its business right. 
I do not know the basis on which Mr Woolerton made those claims. It must be on the basis of his great achievements while working in the telecommunications industry and at the top level of business and merchant banking in New Zealand which we are yet to hear about. But does Mr Woolerton seriously think that if we had left the New Zealand Post Office to run our telecommunications as a monopoly—and Doug Woolerton would have opposed the sale and deregulation of it—we would have Internet use in New Zealand? It would have banned it! The New Zealand Post Office did not want to have fax machines because of what they would do to telegrams. I say to Mr Woolerton that the benefits he enjoys today are the result of efficient business of investment of deregulation and of—[ 
Interruption 
] Whose money did Vodafone use to put in its network? I ask him where that came from. It is not as though the New Zealand Post Office would ever have built a mobile phone network for us to use. My goodness! 
So I say to this House that we should oppose this bill. It is a pinching of property rights. It is this Parliament trying to run business. It will be counterproductive for investment in New Zealand and for telecommunications. I am proud to be in the ACT party and as I look around the House I invite others to join with us and vote for property rights for private contracts and for free enterprise. I advise them not to join the National Party and vote for communism which is what is happening here today. 
SHANE JONES (Labour) 
: 
 I will take a very short call as chair of the Finance and Expenditure Committee and after having been humoured at the end of the year by Mr Hide who I must say although we have not seen a great deal of him every time he does turn up— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member cannot refer to the absence of another member. 
SHANE JONES 
: I withdraw that remark. Mr Hide’s presence in our committee has been felt as we studied the media to see where he has actually been. 
In terms of the bill there is one thing that was not said and that I need to put on the record and it is about two former Ministers Mr Swain and Mr Williamson. Whether Mr Williamson went through some sort of biblical conversion experience I do not know but he proved to be potentially the strongest advocate for moving towards a better balance between investment and competition and obviously for Mr Swain was a tower of strength in developing this bill. Whatever misgivings he felt about earlier episodes in his career they were expunged with the passage of this bill. So both of them ought to enjoy a passing mention so that their names and their deeds are etched into the parliamentary record. Kia ora tatou katoa. 
A party vote was called for on the question  
That the Telecommunications Amendment Bill be now read a third time. 
Ayes 119 
New Zealand Labour 50; New Zealand National 48; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 2 
ACT New Zealand 2. 
Bill read a third time.