Telecommunications Amendment Bill

Hon DAVID CUNLIFFE (Minister of Communications) Link to this

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) Link to this

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) Link to this

Kia ora, mōrena, 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 tātou katoa.

R DOUG WOOLERTON (NZ First) Link to this

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) Link to this

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.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

Mōrena, Madam Assistant Speaker. Kia ora tātou 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.

GORDON COPELAND (United Future) Link to this

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 Māori 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 Māori 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, Māori 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) Link to this

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 Māori 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 $3,000—