Cunliffe David: Telecommunications (TSO Broadband and Other Matters) Amendment Bill — Second Reading 
Cunliffe David: Telecommunications (TSO Broadband and Other Matters) Amendment Bill — Second Reading 
[Volume:673;Page:19307] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The member who has just resumed his seat David Bennett the brains trust of the National caucus has encapsulated the problem with the Telecommunications (TSO Broadband and Other Matters) Amendment Bill. If this is an example of the National Party moving quicker I point out that it took National 2½ years to even think up what its policy was because all it was elected with was a slogan. That slogan said—and I call it to mind—“A $1.5 billion subsidy buys fibre to the home for 75 percent of New Zealanders within 10 years.” 
Clare Curran 
: Here it is. 
Hon DAVID CUNLIFFE 
: There is the card. The problem was that the numbers never did add up. There was never any way that $1.5 billion of a commercial investment seeking a commercial rate of return could have achieved that. When the Minister for Telecommunications and Information Technology Steven Joyce realised he had made an undeliverable promise he went through all sorts of contortions to try to make ends meet. The net result of that was essentially to “sell the law” for a subsidy that none other than Sir Roger Douglas pinned officials to admit was between $400 and $600 million per annum worth of disguised subsidy. 
The point about selling the law is that it has become a habit for this Government. Whether it is Warner Bros Sky City Telecom or CanWest the issue here is that this Parliament is being dragged into disrepute by a Government that has deserted principle and has no clue about policy design. 
I will not go further in speaking about Mr Bennett’s speech because to be honest—and I try to be fair—he made no contribution to the select committee process at all and he has made no contribution of substance to this debate. Mrs Turia however did and I will pick up on a couple of points she has made. The first is that the Maori Party was late to the play in supposedly forcing a concession from the Government on the issue of the regulatory holiday—that bizarre prospect of 10 years with no oversight on fibre by the Commerce Commission. I agree with the position the Maori Party finally took but it voted with the Government at every stage of this bill in the select committee and it made no oral contribution to the debate at all. What I suspect is that the Minister rather like his involvement in the Epsom election for ACT realised that he had got the entire industry offside that everybody other than Telecom was siding against the Government and that he was isolated with a minority of one. I can imagine a conversation when he told the Maori Party to come up to his room and pretend to force concessions out of him so that he could get out of the dead-end street he had got the Government into. 
I suggest that the public think very very carefully before accepting the Maori Party’s protestation that it got this over the line. The Government knew it was in trouble. Nobody at all in the industry other than Telecom supported it. Not even Te Huarahi Tika Trust which was the owner of shares in 2degrees supported it and 2degrees and Bill Osborne in particular argued vociferously against this bill. They made clear that the bill was bankrupt in terms of policy design. Why did the Maori Party not take a stand earlier in the select committee process? Only the rear-view mirror and the voters will tell. I note that the Maori Party is coming a dismal third in the Te Tai Tokerau by-election because it is becoming irrelevant to the national debate. It has become the plaything of the National Party and it is a sad thing to see a party that once held the mantle of some people’s aspiration fall so far so fast. 
Sitting behind Mrs Turia in the Chamber is Sir Roger Douglas and I offer a sincere compliment to Sir Roger. His questions in the select committee were incisive and his minority report—or at least the first four parts of it—are of a very high standard and I reference them for the public’s reading. Unfortunately his alternatives were almost worse than the problem as they were to just leave it to the free market. 
It is here that I have to take a brief trip down memory lane. Before the Labour Government busted the Telecom monopoly we had Telecom taking monopoly rents off New Zealanders and we had low investment high prices and one of the world’s slowest broadband networks. When we busted that market wide open we got double the investment flows New Zealand climbed up the broadband rankings and we had a better competitive environment where all including 2degrees could play. More market means more monopoly I say to Sir Roger—that is the problem we came from. Let us look at this bill to see what it does. The slogan as I said was “$1.5 billion buys fibre to the home for 75 percent of New Zealanders.” But it never could and never would not when that funding was a straight subsidy. That was a commercial investment through Crown Fibre Holdings with a rate of return and big strings attached. The Minister realised when he came into office that it was not a policy at all; it was a slogan. 
Labour had ultra-fast broadband packages up and down the country ready to go. I know because I was the Minister. I had them signed off and sitting on his desk the day that he took office nearly 3 years ago. We have lost a full 2½ years of roll-out because the National Party campaigned on a slogan and the Minister had no policy when he took office. So what did he decide to do after those 2½ years? He came up with an absolute mess an absolute dog’s breakfast of a prescription. I have to say to listeners to the debate that I have never seen a Crown agency testify so strongly against the Government of the day as the Commerce Commission testified—and good on it—against this bill. The regulatory holiday would have taken the commission off the job for 10 years. That is about 5 generations of broadband technology. The great-great-great grandchildren in technology terms would have got a look-in from the Commerce Commission but not until then. 
The bill replaced the old Telecom wire monopoly abridged by our pro-competitive regulation with a new fibre monopoly. It was not Telecom; that name was always a furphy. It was Chorus that had the monopoly on the wholesale and network layers. If the Government wanted a competitive environment it needed a fair and open access regime. We managed to twist National’s arm into getting “equivalence of inputs” which is technical language I know for the public but it means that Chorus will be forced at the wholesale level to at least tell people what the conditions of offer of sale of services would be and that would have to be the same for internal and external parties. It just does not apply to fibre for the first 8 years. What we are left with is a system where the business that owns the network Chorus—“Telecom II”—does not have to tell people how the detail is drawn does not have to offer exactly the same product on exactly the same terms at the layer zero and layer one level of the wholesale network and can screw the scrum under this bill. 
The effectiveness of the regulation is cut to pieces and the Government knows it. It is not an accident. The public need to know that this is a deliberate policy choice made because the Government subsidy fell short so it had to buy the bids by selling the law just as it did for Warner Bros just as it is doing for Sky City and just as it did for CanWest on the broadcasting spectrum fees. It is a terribly dangerous slippery slope the Government is on here where the integrity of the Crown itself is called into question not only by terribly bad policy design but by the deliberate giving away of the public’s protection in exchange for money in the hands of the bidders. It is as crass and crude as that. 
If Government members of the Finance and Expenditure Committee did not appreciate the game they have less intelligence than we credited them with. I would like to think that they do. Concerning Peseta Sam Lotu-Iiga and Craig Foss I say that I know Craig Foss is an intelligent man. I know that he must understand that these bids have been bought. Sam Lotu-Iiga has a so-called business background as well. If he does let him take the next call or Mr Foss and explain to us how the Government has not sold the law to encourage bids in terms of bad regulation. 
Our key concerns were the ridiculous regulatory holiday through five generations the lack of clarity around the open access regime the mandatory averaging of prices the opaque and tilted asset split within Chorus the Commerce Commission exemptions the possible breaching of our World Trade Organization obligations and the question of tax write-offs for Telecom which we will explore in the Committee stage. This is bad law; it will leave New Zealand worse off than before. The next chapter of this debate is a monopoly on content for Sky television and we will come to that later.