Cunliffe David: Telecommunications (TSO Broadband and Other Matters) Amendment Bill — Third Reading 
Cunliffe David: Telecommunications (TSO Broadband and Other Matters) Amendment Bill — Third Reading 
[Volume:673;Page:19688] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 In the third reading of the Telecommunications (TSO Broadband and Other Matters) Amendment Bill I am not going to comment on the member who has just resumed his seat David Bennett because as usual there is nothing much to comment on in what he said. I am going to comment however on the opening comments of the Minister for Communications and Information Technology as follows. 
Firstly the Minister did not perhaps mislead in the technical sense but certainly he pulled the wool over the public’s eyes in several key respects. He said that Chorus will maintain the Kiwi share obligation on Telecom. That is factually incorrect in two respects. First it is entering only into a contract called the telecommunications service obligation not the Kiwi share and Chorus is not equivalent to the whole of Telecom which is currently covered by the existing Kiwi share. Second he said that there would be open access but then contradicted himself by admitting plainly to the House exactly what the Labour Opposition has been saying which is that the weaker standard of access called “non-discrimination” applies across the board but the stronger standard called “equivalence of inputs” will apply only to some parts now and takes 8½ years to apply to everything. That is not good enough for the New Zealand system. 
The Minister said that people would not be paying more for their existing telephone lines under mandatory de-averaging. Well the objective analysis we have seen both from the library and from members of the industry is that the average New Zealander will pay at least $5 more a month for the same service they are currently getting on their copper phone line. The reason that is being done is precisely to make it less costly for them to shift to a fibre-based service except that they will not get the fibre for 8 to 10 years in many cases and will be left paying a higher price for today’s slow copper in order to subsidise Telecom to roll-out fibre eventually to some. The Minister for Communications and Information Technology then said that he was unsure whether he was being described as too slow or too quick. I can help him on that. It took him 2½ years to think up a policy after being elected. He did not have a policy; he had a slogan. That bit was too slow. The bit that was too quick was the select committee process where he started out after 2½ years of going round in circles by giving the public and the industry only 10 days to put together a submission. After 2½ years it was 10 days— 
Peseta Sam Lotu-Iiga 
: That’s not true. 
Hon DAVID CUNLIFFE 
: —which was pushed out to 3 weeks by the Finance and Expenditure Committee as Mr Lotu-Iiga knows. Either way it was a travesty. It was not an accident; it was a deliberate tactic by the “TSO Minister”—that is the “Terribly Slimy Operator” the “Terribly Slippery Operator”—to take as long as possible in the darkened rooms and to then try to railroad it through preventing the industry from having a decent opportunity for rebuttal. 
There are unanswered questions about taxes and there are unanswered questions about international obligations where the world’s No. 1 law firm at taking cases to the World Trade Organization issued an extensive opinion saying that New Zealand was in breach of its obligations because of a disguised subsidy to Telecom. Do members know what? We did not get so much as the dignity of a written opinion from this Government. We had half a page—half a page—from the Ministry of Foreign Affairs and Trade and a file note from the Ministry of Economic Development saying that it does not matter and that we were right. Well that does not cut it and the cost of that arrogance may well be a suit in front of the World Trade Organization. 
I will frame the rest of my comments using precisely the objectives the Minister himself called the House to mind. Firstly there is cost to build. The Minister said that this was cheap; this is not cheap. The purpose section of the current Telecommunications Act talks about the long-run benefits for consumers. What has happened here exactly as my colleague Clare Curran has said is that $1.5 billion—not as a grant not as a stimulus but as a commercial investment seeking a commercial rate of return—was never going to be within a bull’s roar of being sufficient to get 75 percent of homes covered by ultra-fast broadband. Just look at the costs in Australia. So to solve that problem in the short term this Government sold the law. It sold the law for 30 pieces of silver. Does that sound familiar? Maybe we should call this bill the “Judas Bill”. The Government sold the law in this case for $400 million to $600 million and I give credit to Sir Roger Douglas for nailing the officials on that point. For half a billion dollars extra Telecom has got its leverage over the law once again. It took a long time to sort out that problem. When we did sort it out—and it did not come easy—New Zealand rocketed up the international broadband rankings. After 2½ years of dithering by Steven Joyce and an anti-democratic parliamentary process Mr Joyce has managed to tumble us down those rankings again. 
This National Government once again has proved itself to be out of touch and out of ideas when it comes to high tech. Those members just do not do it too well do they? In terms of costs for consumers the Minister said that prices would generally be competitive. Well no they are not competitive today. People are paying too much now for their copper—5 bucks a month at least—and they will be paying too much for their fibre because the disciplines to keep it competitive have been fatally weakened. Imagine taking the cop off the beat for 10 years. The 10-year regulatory holiday—what an obscenity to good governance that was. What a preposterous idea! How could we imagine a responsible Minister bringing to the New Zealand Parliament the idea that we would take away for a decade the hard-fought protections of the consumer? What a ridiculous and laughable suggestion. It was so ridiculous that the Minister was in a minority of one. Only Telecom backed him and when his friends deserted him he called in the Maori Party to provide a fig leaf so that he could back off it. What a backdown it was. When he changed his mind and Telecom complained he came up with an indemnity for Telecom funded by the taxpayer so that if it was caught out by the regulator in future and had to drop its price it would not pay the difference but the taxpayers—mum and dad Kiwis—who were already paying the phone bill would have to pay a bigger tax bill as well. That is an appalling precedent and this Parliament is the worse for it. Our statute book is the worse for it. 
I will draw the debate in this third reading together with some form of conclusion. Firstly this is bad law. It lacks a good strategic context. It says nothing about the ability of every New Zealander to hook up. By raising costs and prices it means that low-income Kiwis those on the wrong side of the digital divide are now even further behind. Secondly it weakens fatally the regulatory framework particularly at the wholesale level. It does so particularly at the crucial layer 0 ducts and layer 1 dark fibre where the proper disciplines of equivalence of inputs do not apply on fibre for 8½ years. This represents a covert backroom deal with the dominant player in the industry. Strangely enough not even the Minister will know until after the Telecom board has decided the nature of the split which assets are going where and what the final shape of the deal will be. That is great for the interests of shareholders but not great for the interests of consumers. 
We are going back to the future one suspects. It has set back confidence in the industry already. The damage has already been done. It will not take 10 years to realise that damage. The industry has started to shut down. What would a rational policy have looked like? It would have said we need to get fibre in the ground to take New Zealand forward. We want to get as many players as possible contributing. We have an inclusive framework not an exclusive one where they bid one against another and only Telecom gets to play. An inclusive process would have got the most investment from the most players to build the most fibre as fast as possible. That is the opposite of the outcome of this bill. Consumers get a worse deal than they need to get today and their losses will accumulate over the 10 years. It leaves unanswered the crucial questions for the future. How will we get all New Zealanders on to the net and how will we ensure free access to content? Are we building a new monopoly for Sky television? That is the next chapter of this sorry saga.