Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill

The debate on this part includes schedule 2A.

I am pleased to take a call on Part 1A of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, and signal that Labour is putting up three amendments to this part. I will briefly speak on them; I hope to get a call on each of them because they are all very significant. The first amendment, in respect of clauses 23B(3), 23C, and 23H, addresses the issue of ministerial responsibility and the ability of the Minister for Communications and Information Technology to take control of Telecom’s structural separation arrangements on his own, without redress to public consultation or a requirement to take advice on those structural arrangements. Instead, the bill as it stands allows the Minister to essentially make his own decisions and make up his mind without recourse to anybody. That is not much of a surprise when we think of the modus operandi of this Minister in making decisions generally. It is the “Trust me, I know what I’m doing” approach and any criticism is irrelevant. So that is a fairly significant amendment.

The second amendment that Labour is putting up to Part 1A is to clause 23ZE. It is on the significant issue of what happens when Telecom structurally separates, and what happens to the proceedings that have already been brought against Telecom and proceedings that may be brought against Telecom between now and the structural separation. Nothing in the bill guarantees that parties that take legal proceedings against Telecom for any breach of the current operational separation during this enforceable period will be able to have those proceedings seen through after this legislation is passed. Given, as my colleague Trevor Mallard raised, the sheer amount of breaches and anti-competitive behaviour for which Telecom has been held to account in recent years, this is a significant issue. There is an investigation into a breach currently under way, and there is no guarantee under this legislation that that investigation can be seen through to its conclusion. So that amendment is quite important, as well.

The third amendment to Part 1A amends clause 23G. Again as my colleague Trevor Mallard highlighted when he mistakenly thought that Part 1A was Part 1, this amendment amends the maximum penalty for breaching a number of provisions on the approved asset allocation plan and the conditions of the plan, and it takes the penalty up to a significant penalty not exceeding $100 million rather than not exceeding $10 million. There are some very good reasons for that, and no doubt more of my colleagues will address those issues as we go through Part 1A. Some of those reasons include the sheer number of breaches that have been made by Telecom, the stakes that are involved in the sheer amount of taxpayers’ money that has been put into the broadband scheme, and the fact that Telecom has been handed a monopoly by this Government in rolling out this fibre scheme with very few controls, with many of the arrangements being undertaken through contractual arrangements, and with little or no public scrutiny. The Commerce Commission is being held at arm’s length and held away from regulation in this area, and many of those issues will not be able to be addressed until 2019. The public is not being guaranteed that they will be getting fibre delivered to their homes until as late as 2019 and perhaps even later. So there are a number of issues that should require Telecom, when it breaches process under this arrangement, to feel the financial pain of not meeting the obligations it is supposed to meet.

Although there are some detailed matters that have to be dealt with, I think Part 1A is probably the best part on which to make a pretty clear statement with regard to the details in these arrangements. When there is a change of Government, and I expect there to be one in November, each of these details will be reviewed and all comforts that this Minister has given to Telecom and any of the other providers will also be reviewed and they will not be guaranteed.

I want to make it clear and put it on the record that if this Minister enters into contractual arrangements that a subsequent Government finds are inappropriate and too expensive, then they will be reversed following a review and they will not be compensated for. I just want to make it very clear that anyone entering into an arrangement based on this legislation has to know that it may not last. Like all legislation, these clauses, if they are passed—and I expect they will be passed—will be subject to further parliamentary review and the possibility of amendment without compensation.

I now want to say why I am so anxious about these provisions, and I want to start from where I was so kindly interrupted earlier on. It goes to the taxation consequences of structural separation. I do not understand—and I do not think any reasonable person can understand—why a particular telecommunications company, when it chooses to do something in the interests of its shareholders, should be exempt from the normal taxation liabilities that would occur at that stage.

A number of preferences by way of subsidy and by way of what I regard as a regulatory rort will be reviewed. It will be questionable whether it is appropriate to review and change past taxation arrangements. I think it is probably fair to say that retrospective taxation is a bit hard to do, although I might say we will still be within the same financial year. That is an issue that is relatively important. I think it is important to place on the record that Labour feels that some of the things done within this legislation are wrong. I know this is not the time to have a principled debate about whether broadband is good—of course it is a good thing; it is an important thing—but what we are talking about here and what is in the very detail of the bill, which we will get into, is a method of getting there and the taxation, pricing, and penalty arrangements that will occur.

I want to make it clear and say that the idea that the division is not a kind of assessable income is questionable. Either it is either the case or it is not. If it is assessable under the Income Tax Act, then it should be assessed. It should not be exempt by this legislation or, in a similar way, by the Estate and Gift Duties Act.

I now turn to the question of the finance leases and the arrangements for them, which are outlined in section 69XW in clause 23H. What is the system of review that ensures that the revenue is not being adversely affected by these transfer arrangements? Or if the revenue is to be adversely affected by these transfer arrangements, by how much? Is the Minister aware of the cost to the Crown of this treatment of the finance leases? If so, can he tell the House? If not, could he bring that information to the House on Tuesday.

I turn to the question of penalties. I am relatively pleased that the Chairperson effectively struck out my earlier contribution on this question, because I cannot now be pinged for repetition. On 19 separate occasions—that is the figure I have in my head, but I am up for correction—Telecom has been found within civil courts to be in breach of its competitive requirements. Telecom made an art of hiring lawyers in order to keep its competition away. The bodies of its potential rivals are littered around New Zealand and around the world. Telecom used to do this regularly, and to be fair, it was an expert at it. Telecom had some of the best lawyers in the country. It paid them a lot. It employed some of the biggest legal firms in order to prevent proper competition from occurring.

The cost to this country has been enormous. I want to be clear that I will take some responsibility for it, as a backbencher in the previous Government at the time Telecom was sold. A significant proportion of the shares went to two American companies. Americans tend to sort out these issues through legal matters and through the involvement of lawyers rather than with engineers and from a competitive approach. Out of that there has been a development within Telecom of drawing on lawyers as soon as possible, rather than moving towards a competitive situation. Therefore, the point I am making is whether $10 million is a sufficient fine for a breach of section 69L in clause 23H, which is a failure to comply with or amend sharing arrangements. That goes right to the basis of competitive behaviour.

💬 Clare Curran: It’s a drop in the bucket.

Well, it is a tiny amount, considering the billions of dollars that can stand to be gained through those anti-competitive behaviours. Line of business restrictions are very, very similar behaviours to have occurred.

Failing to notify sharing arrangements incurs only a $1 million fine. A duopoly of two companies working together through a secret arrangement and failing to inform others of what they are doing goes to the core of anti-competitive behaviour. I think the Chairperson and I might say that of course companies in New Zealand would never do that sort of thing and that it is unethical, wrong, and illegal, but unfortunately on 19 separate occasions Telecom has been found to act in this anti-competitive manner. Therefore, I am saying that these penalties are woefully inadequate. They are woefully inadequate, frankly, for a continuing breach. The fine is only half a million dollars for a continuing breach of section 69L or section 69R in clause 23H—the failure to comply with the sharing arrangements, or the line of business restrictions provisions. Those are very, very small fines when we are aware that billions of dollars in revenue will be available in this area and that every encouragement to rort is sitting there for these companies that are favoured by the Minister’s arrangements.

It is a privilege to take a short call on Part 1A of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, but first I congratulate the Minister for Communications and Information Technology on bringing this bill to the House and our Finance and Expenditure Committee on the work we did collaboratively around the select committee table. Despite the fact that certain Opposition members were delaying the progress of this bill, this bill has come to the House in due course. It will improve productivity, improve economic growth, and certainly provide jobs and opportunities for our nation.

I will return to Part 1A of the bill. The personal and vindictive attacks on the Minister in the chair, the Minister for Communications and Information Technology, that have been raised consistently from members across the aisle I find repugnant, quite frankly. Labelling the Minister as the “Trust Me, I Know What I Am Doing Minister” or the “Minister for Miscommunications” I find repugnant. I find it obscene. If Labour members cannot argue about the issues and about the clauses that are contained within the bill, then those members will be spending a long time in Opposition thinking about that.

I will point out the changes that the Finance and Expenditure Committee made during the select committee process in the area of the asset allocation plan. We recommended a new clause 23F(1) requiring Telecom to publish the overview of the asset allocation plan “as soon as practicable” after the ministerial approval but no later than the separation date. We also made what I thought was one of the better changes to clause 23G(2), which has already been mentioned. It includes a penalty for Telecom if it does not demerge consistently with the approved asset separation plan. That penalty is up to a maximum of $10 million, which is no small fee. It is a substantial amount, and that penalty would be imposed only after the separation date if the demerger did not occur in accordance with that plan.

That is a clear indication of where the select committee made a recommendation that differed from what is in the Minister’s Supplementary Order Paper, so clearly it is not a case of the Minister just saying “Trust me, I know what I am doing.” I thought the democratic process went well throughout the select committee stage, and we came to this House with a bill that has been amended in a very appropriate and very apt way.

💬 Clare Curran: What about New Zealanders?

Miss Curran shouts out “What about New Zealanders?”, and Mr, ah—

💬 Stuart Nash: Nash.

Sorry, it is Mr Nash; I forgot the member’s name—and Mr Nash talked about rural New Zealanders, but we know that Labour does not like farmers. Those members do not like rural New Zealanders—

💬 Hon Trevor Mallard: I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Eric Roy): I think I can anticipate the point of order. It is about relevancy. I ask the member to debate Part 1A.

Thank you, Mr Chairman, but I was responding to shouts from the Opposition. My understanding of—

💬 Hon Trevor Mallard: I raise a point of order, Mr Chairperson. I think I know better than anyone else that a member is not allowed to dispute a Chairman’s ruling.

The CHAIRPERSON (Eric Roy): I do not think the member was—

Point of order—

The CHAIRPERSON (Eric Roy): No, I will just speak on that.

💬 Hon Trevor Mallard: He was commenting on it.

The CHAIRPERSON (Eric Roy): I am on my feet. I do not think the member was disputing it; he was making an explanation, which is also not helpful. I ask the member to debate Part 1A.

💬 Hon Trevor Mallard: Members are not allowed to comment on a Chairman’s ruling, at all—

The CHAIRPERSON (Eric Roy): Oh!

💬 Hon Trevor Mallard: —not that I am doing so now.

If I may?

The CHAIRPERSON (Eric Roy): Yes, you are on—proceed. The member has the call.

Miss Curran shouted out “What about New Zealanders?”, and I was merely responding by saying that this bill, and this part of the bill, is all about promoting the wealth of New Zealanders. It is all about promoting the benefits to our country of what broadband roll-out will produce.

New clause 23G also differs from the Supplementary Order Paper, in that it provides Telecom with some flexibility with regard to the demerger process.

It is a pleasure to join in this debate on Part 1A of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. The Minister in the chair, the Minister for Communications and Information Technology, has a reputation politically that one of his favourite phrases is “whatever it takes”. We hear that is the phrase Mr Joyce believes has marked his political career, and it seems to me that in Part 1A, it is whatever it takes—whatever it takes to ram through this separation of Telecom without, in the opinion of members on this side of the Chamber, sufficient and robust accountability mechanisms.

I will talk in this call on Part 1A about transparency. As a member of Parliament who was not on the Finance and Expenditure Committee, and as somebody who is interested in these issues and who knows about the importance of broadband to the future of the New Zealand economy and to the future ways in which New Zealanders will communicate with one another and the rest of the world, I am concerned about the state this bill is in as it returns to the House. As a member of Parliament and as a concerned New Zealander looking to the importance of broadband for the future, I cannot believe that this bill has returned to this House in a state that I believe the Minister should be ashamed of. I know that the select committee has done its best with this bill, but a number of concerns were raised in the select committee that have not been taken up.

In particular with regard to Part 1A, I applaud my colleague Clare Curran for the amendments she is proposing and, particularly, I want to focus on the amendments to clause 23 she is proposing, because they are about transparency. It seems to me, again, as somebody coming to this bill who is concerned about ensuring we have the infrastructure we need to be a proper 21st century economy, that we also need to have in place rules and regulations that are fair and transparent, because both of those things are important to the future of the New Zealand economy. Part 1A, as it stands, falls well short of the standards of transparency that New Zealanders have every right to expect from this Parliament. Sam Peseta Lotu-Iiga, the previous speaker, said it was obscene for us to say things like the “Minister for Miscommunication”. Well, this part demonstrates why that kind of epithet actually works for this Minister, because we see a situation where the Minister alone—man alone Steven Joyce—decides about the asset separation.

💬 Clare Curran: “Trust me. I know what I’m doing.”!

That is right. That is what the Minister is telling us. Well, the problem for members on this side of the Chamber is that the track record in this area is not good. The track record in terms of transparency in telecommunications under this Minister is not good. Clause 23, as it stands, fails to change my mind, as a member of Parliament who is interested in this issue, that this Minister has the transparent process we need. So that is why Clare Curran’s amendment will enable the New Zealand public to have some kind of say in the way the separation will happen.

I am sorry to say this but members on this side do not feel that the Minister acting as man alone “trust me, I know what I’m doing” is sufficient protection for New Zealanders to know that this deal stands up—that this separation is actually in the best interests of New Zealanders as a whole, and not just one company and not just this one Minister. Clare Curran’s amendments will add a number of new paragraphs to clause 23B(3) and insert new subclause (2A) in clause 23C. That amendment provides that the Minister actually has to take into consideration section 69A of the Telecommunications Act 2001, which includes the idea of the promotion of competition for the long-term benefit of end-users—

💬 Clare Curran: The people.

That is New Zealanders—the end-users of this broadband. It is not just Mr Joyce, it is not just Telecom; it is actually all New Zealanders. This is the equivalent of us working out the future highways of the country, of asking who they are for. Are they just for the people going on holiday up on the Pūhoi to Wellsford superhighway or are they for all New Zealanders? Will ultra-fast broadband—the key to unlocking economic futures for New Zealand—be available to all New Zealanders? Are we establishing a regime that is in the interests of end-users—as section 69A says, “for the long-term benefit of end-users”? We are not talking about the short-term electoral cycle, the slogans that Mr Joyce might come up with, but whether all New Zealanders will have an opportunity to benefit from this. So that is why Clare Curran’s amendment would insert new subclause (2A) in clause 23C.

I also take slight umbrage at Sam Lotu-Iiga’s comments. I did not deride the Minister in the chair, the Minister for Communications and Information Technology, at all. I called him smart, intelligent, and cunning. To most people those terms, if not of endearment, are certainly not disparaging.

I will talk specifically about clause 23C, and I have a number of questions and I do not think they are contentious. I will ask a number of questions that I am hoping the Minister will take a quick call on and clarify them. If I have questions about this, then no doubt there are people out there who are a lot more intelligent than I am who are also asking the same questions if they have the bill in front of them.

The first thing, for example, is in clause 23C, “Decision of Minister concerning approval of asset allocation plan”. Subclause (1) states: “The Minister must, as soon as practicable after receiving the asset allocation plan,—” make a decision. I just wonder what the process will be with regard to that. Does the Minister envisage that he will take this to Cabinet, or will he just make the decision himself? Subclause (2) states: “Before making a decision … the Minister may consult the Commission.” He does not have to consult the commission, but he may do. I wonder, first, whether the Minister will take this to Cabinet and, second, whether it is the Minister’s intention to consult the commission. He does not have to under the Act, but the bill states that he may consult the commission. I am just going to jump around a little bit, but I will come back to that point.

With regard to the approval of Chorus undertakings, clause 23GB(1) states that the Minister must consult the commission. Obviously, there is a legal obligation under that clause, but there is not a legal obligation for him to consult the commission with regard to Telecom’s asset allocation plan. I just wonder whether the Minister is thinking of doing that.

I go down to clause 23F, “Telecom must make overview of asset allocation plan publicly available”. We have some words there that I think the Minister will have a view of in his mind, but, just for clarification, it states: “(1) Telecom must, as soon as practicable after approval of the asset allocation plan under section 23E but no later than separation day, make an overview of the plan publicly available.” Again, I do not know whether “as soon as practicable” has a legal definition because I am not a lawyer, but I wonder whether the Minister envisages that “as soon as practicable” is perhaps 2 weeks, a month, or a couple of days. The clause does state “but no later than separation day”, so I would be slightly concerned if the asset allocation plan had been approved by the Minister, a separation day—which we can talk about later on—is announced, and then, 1 day before the separation day, Telecom makes this overview publicly available. It does not seem to be that equitable. It would be good if this overview was publicly available, so again the industry and the people of New Zealand just had an idea of what that allocation plan was.

I wonder again whether the Minister has an idea of how long the time will be between his approval of that asset allocation plan and separation day. Obviously, a lot of work has to go into the asset allocation plan, but I wonder whether he is envisaging this will be a month, 6 months, or 2 years. I assume it will be at the lower end, but I would not mind just knowing whether the Minister has an idea.

Again, we come down to the requirement that Telecom makes the overview of the plan publicly available. I ask whether we are talking about a website here, or whether the details will be published on a full page in the Dominion Post, because “publicly available” means something different to Clare or me from what it means to my grandmother, for example. I would like just a little clarification.

Talking about the requirement that it be made publicly available, clause 23F(2) requires “sufficient information … to enable a reasonable person to understand the material aspects of the asset allocation plan.” When we are talking about the reasonable person and sufficient information with regard to Telecom’s separation, it is slightly different from the game play of the All Blacks, for example. Again, I would not mind having a little bit of an idea of what the Minister believes is sufficient information. Will someone be able to read the information and get an understanding of what will go where, or will it be pages and pages of little wee words? I would like the Minister to just clarify that. I know that the reasonable person test is a legal test, but it would be interesting to know how the reasonable person test comes into play when we are talking about the separation of Telecom assets. Again, the Minister may have an answer to that question.

I go on to clause 23FA—it is not FA at all; it is very important. I am not quite sure what this clause is to do with. Its heading is “Telecom must update Minister and overview on day before separation day”. The phrase “must update the Minister and overview on day of separation” does not quite make sense, but anyway. The clause states: “Telecom must, on the day before separation”—I assume this is 24 hours before D-Day, in essence, with regard to this—“(a) make changes to the asset allocation plan in order to update it to take account of— … (ii) trivial differences between the plan as approved and the demerger arrangement; and (b) notify the Minister …”. Again, what is trivial? Is the Minister expecting that the allocation plan will be out there? As it says in the bill, the Minister before D-Day, or “S-Day”, has to be notified of any major plans, but what is trivial? We are talking about a huge organisation here—in fact, it is probably the largest corporate in this country—and “trivial” to that organisation means something different from what it does to a corner dairy, for example.

💬 Clare Curran: It’s only going to get larger.

It will get larger. But I am just curious to note the difference between the meanings of “trivial”.

The reason I say this is that when we come to clause 23G, “Demerger must be in accordance with asset allocation plan”—which makes perfect sense—we see that subclause (2) states: “The High Court may order Telecom to pay to the Crown a pecuniary penalty not exceeding $10 million if the court is satisfied, on the application of the Chief Executive of the Ministry, that Telecom has failed, without reasonable excuse, to comply …”. I go back to clause 23FA, which states that Telecom must notify the Minister in writing. Does that mean Telecom has to have posted that letter within 24 hours, or that the Minister must have received it within 24 hours? Again, it comes with “without reasonable excuse,”.

My question here—and I know this can be decided by the court, because the clause states that it is up to the High Court to determine—is whether this means that if Telecom has put in writing to the Minister the changes it wants to make, it is indemnified from prosecution and a major fine. It may put something in there that is deemed trivial from Telecom’s perspective, or it may actually use this clause as an out. Telecom may use it as an out. The chief executive of the ministry may take this matter to court, and Telecom will say that it is not liable for a $10 million fine because it notified the Minister. There is a little bit of ambiguity there, which I am hoping the Minister will address. I do not think they are difficult questions, but it is fair enough to ask them.

I will now talk about the approval of Chorus undertakings. Clause 23GA states: “Chorus must submit draft undertakings … [within] 20 working days”, so it is very specific. But then it states “or any later date, before separation day, that the Minister may allow.” I am just wondering whether the Minister has an expectation that perhaps 20 days is too short. Does the Minister think that perhaps we should have made it 40 days or 60 days, and is he expecting a bit of a delay? There is a little bit of wriggle room here, because the only requirement is to submit it before separation day, which might not be 20 days; it may be 60 days. I would like just a little bit of clarification on this.

I come back to the point I made earlier. Clause 23GB(1A) states: “The Minister must consult the Commission,” but then it states: “and may consult any other person that the Minister considers has a material interest, before deciding whether to approve or decline …”. I am wondering whether the Minister is intending to consult, because he does not have a legal obligation to. He has a legal obligation to consult the commission, but he does not have a legal obligation to consult anyone else in the industry. It states that the Minister may consult others in the industry, and I am just wondering whether he has an expectation that he will allow 2 weeks or maybe 3 weeks in which to go out to those in the industry and consult them to make sure that everything is kosher. That is not a difficult question, I would have thought, but I would not mind getting the answer to it. Consultation is most important, I would have thought.

We talk about separation day. With regard to separation day, Telecom must make certain information publicly available, as per clause 23GDA(1), and I am just wondering whether the Minister expects that Telecom will make information about the separation day available at the same time that it makes its asset allocation plan available. The bill states that it may do that, although it might not. But I am wondering whether there is an expectation. I would have thought that if Telecom has gone into great detail on an asset allocation plan that the Minister or Cabinet or whoever else may approve, then separation day would be quite a big part of that, because I have no doubt that there will be a major time line outlining what will happen. I am just wondering whether the Minister could comment on that.

I take a call in regard to Part 1A of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. This bill is part of the economic step change that the New Zealand economy needs, and it will happen when we provide the infrastructure for our country to go forward. I congratulate the Minister in the chair, the Minister for Communications and Information Technology, on bringing this legislation before the House. He has delivered on an election promise that the National Party made. He has delivered legislation that will have a practical economic effect in New Zealand. The Opposition is jealous that within 2 years we have actually made changes and done things that are in the best interests of this country.

Labour was afraid to step out and make such decisions when it had the power of being in Government. It is now trying to derail our attempts to build a stronger economy, and I refer to the comments made by Trevor Mallard that Labour would not support this kind of approach. That is an indication of a party that does not believe in this country. It does not believe in the people of New Zealand. It does not want to see a strong New Zealand; it wants to see a poor New Zealand that it can control and define. That is the difference between the two main political parties.

When we look at this part today, entitled “Structural separation of Telecom”, we know that the Opposition has been talking about the power of the Minister for Communications and Information Technology, and saying a Minister should not be able to do the things that this bill enables the Minister to do. Well, under Labour, its Ministers were given exactly those kinds of powers in many areas, and they used them all the time, without regard to this Parliament, without regard to the community, and without regard to the political implications. This legislation is not such that Labour would have used it in its time. This legislation is such that it is in the best interests of New Zealanders, has rigour, and will enable New Zealanders to have comfort that the Minister is advocating in their best interests and is making the right decisions for this economy going forward.

If we do not have Ministers making decisions, who will make them? Will the Labour elite make decisions if we do not have Ministers, or will some past Labour members make the decisions? The Minister is referred to there for a reason—

💬 Hon Steve Chadwick: I raise a point of order, Mr Chairperson. We have been listening to this member for nearly 5 minutes and he has not referred to Part 1A, at all.

The CHAIRPERSON (Eric Roy): I think he is kind of broadly in the zone.

Shall I say clause 23C, “Decision of Minister concerning approval of asset allocation plan”? I do not know which part of that I was missing. Maybe the member should look at what the legislation says, and that would be helpful.

💬 Hon Steve Chadwick: Part 1.

💬 Hon Members: 1A.

Yes—well, that is what we are doing. The member over there obviously wants to have a broad discussion without looking at the actual relevance of the legislation, which is in the best interests of New Zealanders. By getting a structural approach going forward, we can deliver these kinds of telecommunications initiatives for New Zealanders. I look at the people of Hamilton, who are very, very much looking forward to this legislation, because Hamilton is one of the first centres that was approved through the process of getting broadband. We look forward to the city developing those broadband technologies, so that it can deliver economic growth as an export hub of New Zealand going forward.

This is good legislation. It has been through a process in which this Parliament has looked at it in a detailed way. It is legislation that will be in the best interests of New Zealand’s economic growth, but it is very much a shame that Labour will not support growth, and that it will not look beyond petty politics, see what is in the best interests of New Zealand, and be supportive. We are building a stronger New Zealand in these most difficult times.

I have been listening closely to the discussion on Part 1A of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. A number of specific questions have been put to the Minister in the chair, the Minister for Communications and Information Technology, and it would be very helpful if he gave the Committee the courtesy of taking a call and responding to them. I would like to hear specifically from him on a number of issues, particularly on the issue of ministerial responsibility and how the Minister will make decisions.

I will talk a bit more about that issue, because it goes to the heart of this bill—that is, the Minister making decisions about the structural separation of Telecom, without regard for the people who will be most affected by it. Those people are the consumers: the people of New Zealand who use telecommunications services and broadband. It is unlikely that the vast majority of them, in both urban and rural New Zealand, will get access to fibre—as promised by this Minister and his Government—until at least the end of this decade. The more that is revealed about this issue, the more it is revealed as a big con.

I would like the Minister to address specifically how he sees Part 1A—clauses 23B, 23C, and 23H—in relation to how he sees that decision-making process. What issues will he take regard of? What advice will he take regard of, and what consulting will he do with the regulatory body, with the industry, and with the public who will be affected? That is why the amendment that inserts new paragraphs ensuring that he must take consideration of the promotion of competition for the long-term benefit of end-users—he must take account of that—is so important.

In relation to that point, I mention the purpose clause of new Part 2A, substituted in clause 23H, in which a significant change has been made in this legislation, taking away the balance in the competition for long-term end-users, and putting into a much stronger weighting the regard—the interests—of investors. In fact, the provision puts the interests of investors above the interests of end-users, above the long-term interests of end-users, and above the importance of competition in that area. This is why it is such a significant issue and needs to be addressed, and why clauses 23B(3), 23C, and 23H are so important. I would like to hear from the Minister today how he will make those decisions on the structural separation, and whom he will listen to and consult in doing that.

I will address again in a bit more detail our proposed amendment to clause 23ZE, which would allow parties to take legal proceedings against Telecom for breaches of the current operational separation. This is another important issue we need to hear about from the Minister. The Minister needs to explain to this Committee and to the public of New Zealand whether existing breaches being heard in civil actions against Telecom will continue to be heard, how that will happen, and what will happen if breaches occur in the interim before structural separation takes place. How can the public be assured that they will be heard and that Telecom will be held to account? There have been a number of breaches of undertakings. There have been a number of other anti-competitive behaviours—I think it is as least 19—which my colleague Trevor Mallard has mentioned a couple of times in the Chamber today. There has been a most significant one in recent times in which Telecom was fined $12 million, which is the largest fine through such an action that this country has seen.

Our argument is that these issues are significant in this legislation, through which the structural separation of Telecom will create new entities, because as yet it is unknown how the separation of those entities will occur and where competition will be able to occur in the community at the retail level. An enormous amount of concern was expressed during the Finance and Expenditure Committee hearing about how the accounting separation would occur and where it would occur. This is why the public needs to be reassured that the anti-competitive tendencies that exist within Telecom will not be replicated in the new entities, particularly in the new Chorus2 body.

I will explain this issue for the benefit of the public and people across the Chamber who do not have a clue what it means. At the moment Telecom is divided through operational separation into three different parts: a retail level, a wholesale level, and an infrastructure level. There are clear delineations between each of these parts. The undertakings between each of those parts are important. Under the new arrangement there will be two parts, so a large part of the middle part—the wholesale part—will end up in Chorus. That will give Chorus an advantage in the industry.

As yet it is unknown where that separation will be. The Minister will make the final decision and the final call about that issue without having to take due regard. That is why we need checks and balances within the legislation, so that making the right or wrong decision is not all on the Minister’s head. It does not matter who the Minister is; that responsibility should not be put on the Minister without that Minister having to take due regard, particularly due regard of the long-term benefits of end-users. This is why these amendments are so important.

The Minister has sat in this Chamber all afternoon and has taken one call on this bill. I would like to think he has been listening, taking note, paying attention, and taking seriously the issues that have been raised by members on this side of the Chamber and by the Greens. These issues are really important and go to the heart of how we can trust a structural separation that is taking place in one of our biggest companies in this country, and of how we can trust the processes that have been put in place by this Government in relation to that separation.

My colleague Grant Robertson talked about transparency. This Government likes to pretend it is transparent. It could demonstrate that it is transparent by the Minister getting up and telling this Committee how he will make those decisions, and reassuring the public of New Zealand that those decisions will be made responsibly, and that there will not be a secret process—a discussion behind closed doors that does not involve the rest of the industry, does not allow the rest of the industry to have input, and, particularly, does not allow the people of New Zealand to have input.

The reason I keep talking about the people of New Zealand is that another gaping hole has appeared in this Government’s broadband scheme in a place called zone 3. Zone 3 is a bit like Harry Potter’s—where does he go?

💬 Grant Robertson: Platform 9¾.

I thought it was platform 9½, but apparently it is platform 9¾. It is a place that does not really exist. There are potentially up to 470 schools in zone 3; the Minister insists it is much fewer than that, but he has not provided a list of them. I have a list here of those 470 schools, and they are in communities all over the country. There are big communities; Invercargill in Southland is a serious part of zone 3.

I move, That the question be now put.

I will start off with a question to the Minister in the chair, the Minister for Communications and Information Technology, and with some implicit criticism of some of my colleagues, and certainly other members of the Committee, for what appears to be very poor scrutiny of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. I refer the Committee to Subpart 3, “Line of business restrictions” in Part 2A, and to clause 69QA(2), which will become section 69QA(2). It states: “In this section, unless the context otherwise requires, layer 2 services has the same meaning as in the document ‘New Zealand Government Ultra-Fast Broadband Initiative Invitation to Participate in Partner Selection Process’ dated October 2009 (as amended).” I just want to ask the question: since when should regulations, definitions, of this Parliament, which should be in a bill, be put in an invitation to tender document? We are writing the law of New Zealand, and we are asked to refer to a damn tender document that was put out in 2009 that defines where layer 2 services are.

On occasions we do dirty things and give powers to the Minister to regulate, to set areas, but this thing goes beyond that. It is absolutely constitutionally outrageous that we are setting up a definition, on the basis of which people can be fined tens of millions of dollars—and it should be hundreds of millions of dollars—and we are not even putting into the law the damn definition that they could breach. We are saying people should go to look in the library for a contract request that the Minister put out in 2009. It is just not good enough. It is just not good enough that the Parliament of New Zealand is being requested to act in this way. This is not MediaWorks any more. MediaWorks is about to go broke, and the Government is about to lose its money. This is the Parliament of New Zealand. The person who is sitting in the chair is a Minister of the Crown.

I ask Heather Roy—and I know that the ACT Party is splitting all over the place on this legislation—

💬 Grant Robertson: And in general.

One might well say generally too, but I want to be kind to her, so I will not say that. I ask Heather Roy what the Minister for Regulatory Reform, her friend and colleague Rodney Hide, says about this. I do not hear a word. There is not a word from Rodney Hide about a regulation being set up.

It will be really interesting to hear what the Regulations Review Committee says about this. Does that document, for example, I ask the Minister, have to be referred to the Regulations Review Committee? It is clearly a regulation. It is a weirdly set up one, and it has not been properly through a process. I do not know whether the Governor-General in Council has approved this. The Minister might indicate, even by nodding or shaking his head, whether this document has been properly approved as a regulation through the council.

But the idea that we incorporate into the law of New Zealand some scrap of paper that the Minister signed in October 2009, and say people can be fined $10 million if they do not comply with it, but it is not here—well, again, I ask the Māori Party. There has been a lot of debate about incorporating the Treaty of Waitangi into legislation. A decision has been made, quite properly, not to do so, because of the way that it could be demeaned. But under that Treaty people are not fined directly, as they can be under this law.

I would now like to talk to the variations to, and removals from, the register, and the question of the 6-month period and why the Minister is prepared to have Chorus supply to a user within the 6-month period following the removal of the user’s name from the register. It is a relatively simple question. Is there a practical reason for that? I would have thought the proper process would be that the negotiation and the service stops, and then the user’s name is removed from the register. That is the normal practice. Again, there is the question of where this register sits. What is the status of this register? Are there appeals? Do people have to go to the High Court to determine whether someone’s name should be on the register, or is there another process for working through that?

I turn to the next question, and I say on this one I will compliment the Minister. There appears to be at least some process around it; it is made by notice in the Gazette. I do not know the practice of the current Government, but the practice of the previous Government was that except for trivial matters, matters to be gazetted had to have a Cabinet process around them. Under new section 69N, which is buried in some clause or another—and I am finding the bill relatively hard to follow, because of the way it is currently drafted—the Minister may, by notice in the Gazette, grant exemptions from the application of the subpart. Again, I wonder whether it is appropriate, in these highly important commercial matters, where there is to be a significant advantage to individuals or companies as a result of these exemptions, that it should be on the basis of a ministerial decision. That effectively politicises it.

My question is whether these decisions should be bureaucratic decisions—decisions that are taken independent of Ministers. I think from time to time Ministers are criticised, sometimes rightly and sometimes wrongly, for being too close to particular players in these fields. Therefore, it is a question of whether the decisions could be made independently, as part of the commission, or even whether a designated bureaucrat within the Ministry of Economic Development should be the person to make the decisions. One of the relatively important principles of our Government is that is not the role of Ministers to give significant commercial advantage to individuals. There is no doubt that the ability of the Minister to give significant commercial advantage applies here. I say, of course, the whole deal is of significant commercial advantage, but it appears to me—and I am happy for the Minister to correct me—that under new section 69N there is an ability for the Minister to grant ongoing advantages, or advantages to different players in the field. In my opinion, that is of concern.

There is a question of shared assets. One very real question is where the best place is for profit to be, when that separation has occurred. I take on board the point Clare Curran made that there should be three levels. In fact, there are now only two, but there is room for quite an important interplay in terms of where the costs sit between Telecom and Chorus when the separation occurs. A big part of that issue relates to the shared assets and shared services, which are referred to in new section 69C of the legislation.

I move, That the question be now put.

The CHAIRPERSON (Eric Roy): I will put the question. The question is that the question be now put.

I raise a point of order, Mr Chairperson. In the past the rulings for Chairs on these motions have always been that if new matters had been raised and the debate was relevant, then the debate would not be curtailed. I put that no one else raised the questions I did, and every one of the 17 questions I raised was relevant. We have had no response from the Minister for Communications and Information Technology. I know we are not meant to argue with the Chair when they are considering putting the question, but I ask you to consider whether you have been reasonable in applying the rules in this matter in the way they always have been applied. Otherwise, there is no incentive for members to be relevant.

The CHAIRPERSON (Eric Roy): The incentive to be relevant is that there will certainly be a closure. That is the case. I gave some serious consideration to the whole matter, and I feel that all members who have been seeking the call have had an opportunity to speak. I cannot force any member to take a call. I desire to put the question.

I raise a point of order, Mr Chairperson. I do not mean to trouble you, but I am a new member. We get 10 minutes to speak, and there is no way we can go through Part 1A and mention all of the new points. No one has been derogatory. We have all stuck to the bill and asked relevant questions. I have more questions that are very relevant, which I think—

The CHAIRPERSON (Eric Roy): I have considered those matters.

I raise a point of order, Mr Chairperson. I do this reluctantly. I have carefully considered your decision. I know that you have put the question and that there has been a vote on it. There has been only 1 hour’s debate on the structural separation of Telecom. Therefore, I move, That the Speaker be recalled to give a ruling on this matter.

Motion agreed to.

House resumed.

Speaker Recalled