Adams Amy: Telecommunications (Development Levy) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeAdams Amy: Telecommunications (Development Levy) Amendment Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 21 May 2015. Volume:705;Page:3695. Text is incorporated into the Bound Volume.]Hon AMY ADAMS (Minister for Communications): I move That the Telecommunications (Development Levy) Amendment Bill be now read a first time. There are few countries in the world where connectivity is more important than it is for New Zealand. We are a nation of 4.5 million people and a country situated at the last bus stop on the planet spread across three islands with plenty of mountains lakes and rivers in between. The tyranny of distance from the rest of the world and our unique geography make rolling out high-speed connectivity all the more difficult and all the more important. Broadband is critical to our future because it creates opportunities of untapped potential. It connects New Zealanders with one another and with new markets across the world. It allows our best and our brightest to export new ideas services and products. It is a vital part of the Government’s plan in developing a productive competitive economy and creating more jobs for Kiwis and their families.Over the past 6 years the Government has been rolling out its Ultra-fast Broadband Initiative and Rural Broadband Initiative programmes to lift the connectivity of 97.8 percent of New Zealanders. The first stage of that roll-out is going well. We are ahead of schedule and we are within budget. The Ultra-fast Broadband Initiative build is 46 percent complete and we have completed more than 75 percent of the Rural Broadband Initiative stage one programme. Almost 325000 households are now covered by the Rural Broadband Initiative with 80 percent uptake of the main fixed line component of the programme. We have upgraded almost 80 percent of towers and installed 113 new ones. In the March quarter alone there were nearly 1.8 million unique Vodafone mobile customers using these towers. In addition we have completed the auction and allocation of the 700 megahertz spectrum which will enable the widespread roll-out of 4G cellular networks across more than 90 percent of New Zealand.But although all of that is an outstanding achievement this Government is not resting on its laurels; we are already looking ahead to the next stage. Last August we announced that if re-elected the National Government would look to use the telecommunications development levy to extend the rural broadband programme by $100 million and establish a fund of $50 million to provide mobile coverage to the most remote parts of New Zealand. In March I confirmed that this extension was going ahead. With the success of the first stages of the Ultra-fast Broadband Initiative and Rural Broadband Initiative behind us this Government is looking further forward. We want to push on and extend coverage even further. We want more homes connected to better broadband. We want more businesses participating in the digital economy. We want more remote communities being able to tap into the internet’s potential.The Telecommunications (Development Levy) Amendment Bill is a vital part of this plan. The bill itself is incredibly straightforward but let me set out a little bit about the levy. The telecommunications development levy is an industry levy that is collected from telecommunications companies to fund open access infrastructure in areas where it would otherwise be unlikely to be commercially viable for them to build that infrastructure. The levy payers can then use the funded infrastructure to provide services for their customers. So the key factor worth noting is that the levy is used to fund infrastructure that all of the telecommunications companies can then use—so they are essentially funding their own communal infrastructure which they then use to sell products over. The levy to provide Rural Broadband Initiative facilities is paid back to providers through contestable processes. It funds non-economic aspects of infrastructure so that the industry giants cannot just cherry-pick the profitable areas such as high-density urban areas and leave rural New Zealand in the dark ages.The levy was first introduced in the Telecommunications Amendment Act 2011 and has been applied since the 2010-11 financial year. It replaced the existing telecommunications service obligations liability allocation process which had been in place much longer. This bill does not change any operational aspects of the levy nor does it determine the parameters for how the second phase of the Rural Broadband Initiative will be rolled out. It simply resets the levy amounts for the 2016-17 to 2018-19 years to keep the levy amount at its current level. The telecommunications development levy is currently set at $50 million a year. This is about 1 percent of industry telecommunication services’ revenue. The levy amount is not going up. It is staying exactly the same so the industry will not need to put its prices up or explain to its customers why the bill is changing.It is worth noting that the levy we are proposing to extend is substantially less than the levies that were funded under the previous telecommunications service obligation arrangement which was an average of about $65 million a year. The levy makes up a very small portion of an average monthly bill and as this is an extension of an existing levy it will not increase costs to consumers in any way. Because the levy has been in place for a number of years now we do not expect consumer bills to change. The telecommunications companies already incorporate the levy at this level into their pricing and so there is no reason to change. Let me put this in context in terms of the impact to the average New Zealander. For a consumer on a $19 basic prepaid mobile phone package their contribution to the telecommunications development levy is around 22c a month. This is the equivalent of the cost of a single text message. For a comprehensive broadband package it is around 80c a month. The consumer impact is so low that even if the bill did not pass it is completely implausible to think that consumer prices would be dropped by the few cents a month that are involved.Although the impact of the levy on consumers is tiny the impact is hugely significant for reaching rural communities. It is available to fund charges relating to the telecommunications service obligation—that is the obligation that Spark gave to provide a telephone connection to every household options for free-calling and the 111 service. It funds improvement to the rural telecommunications infrastructure including as we are discussing today the Rural Broadband Initiative. It funds upgrades to the 111 emergency calling system and it is already being used to fund the relay service for the deaf and the hearing impaired. These are essential services that New Zealanders need and use.The $150 million extra that this bill will provide will mean that we can set aside $100 million for the extension of the second phase of the Rural Broadband Initiative to the regions meaning that almost every New Zealander will get access to better broadband and another $50 million to establish a contestable Mobile Black Spot Fund to enhance network coverage in black spot areas as increasingly mobile coverage is expected to be almost universally available.The changes in this bill should come as no surprise. We initially proposed these changes in our election manifesto last year and announced in March that our intention was to follow through. We have been very upfront and transparent about our ambitions to extend rural connectivity and how we are going to go about funding it. Passing this bill in all stages is part of Budget legislation it provides certainty and stability to the telecommunications industry but even more important it allows the Government to get on with the job of rolling out the extension of the Rural Broadband Initiative and better mobile coverage to areas that desperately need it as the legislative mandate must be in place before contracts can be negotiated and this Government wants to get better broadband to New Zealanders as fast as we can.The Ultra-fast Broadband Initiative and Rural Broadband Initiative programmes that this Government initiated are key components to ensuring critical communication services are available to New Zealanders. Now more than ever it is important that businesses and communities right across New Zealand and into our rural and remote areas have access to the information and communications technology capabilities that they require to operate effectively in a competitive global economy. This bill enables us to put the funding mandate in place so we can get on with providing that connectivity. We will continue to look for opportunities to enable New Zealanders to realise the benefits of our investment in connectivity and to ensure that New Zealand is digitally competitive on the world stage. It is with great pleasure that I commend the bill to the House.