Telecommunications (Development Levy) Amendment Bill

I move, That the Telecommunications (Development Levy) Amendment Bill be now read a second time. We heard a lot in the first reading, in the various speeches. We heard from process issues to Labour wanting to declare this successful, important programme a failure. Well, we know that Labour never wanted it. We know that if Labour had been in Government, it would not have done it. But I can stand here as a rural MP—one of the few rural MPs who have actually contributed on this—and say that I am incredibly proud that we have already brought better broadband to more than 325,000 rural and provincial houses. I know that that matters in rural New Zealand, and this bill is about taking that even further.

We have heard claims that this is somehow a surprise move and we have slipped one past New Zealanders. We announced this in August, which was pre-election. We announced it again in March, which was several months ago.

💬 Hon David Cunliffe: Why is it going through all stages in urgency? What’s the hurry?

The bill is the most simple bill imaginable, with one operative clause, doing exactly what we said it would do. To answer Mr Cunliffe’s very simple point, the hurry is that New Zealanders want broadband, they want it fast, and we are going to do everything we can to get it to them.

I also want to reiterate at the beginning of this contribution that the telecommunications development levy cost for consumers is a few cents a month—a very few cents a month—and it has been built into prices for some years. The costs to the telecommunications companies remain exactly the same under this bill. This extension comes into effect on 1 July 2016, but it has not taken some of the telecommunications companies long to jump at the chance to announce price rises and blame the Government.

I have to say, to claim that this extension warrants a price rise is disingenuous at best, and a blatant money grab at worst. Furthermore, the changes do not take effect for 14 months. Given that the telecommunications development levy represents a few cents a month, I will be very interested to see whether prices do rise, when, and by how much. If they do, it is a blatant grab for more profits that they want to blame someone else for.

Let us be very clear about this. What Spark is saying is that it thinks that taxpayers should fund its business infrastructure. We do not. This is infrastructure that telecommunications companies use to provide their commercial services over, and we think that they should pay for it. I am not going to charge every New Zealander to fund business assets for Spark, Vodafone, and others to use. They should pay for it—which is why we levy them—and then provide it on a common basis. It is a well-designed process, it works well, and New Zealand likes it.

The first phase of the Rural Broadband Initiative programme is creating a huge opportunity for regional economic growth, and that is something that this Government is delivering. Alongside investment from the partners, the Government’s deployment of the Rural Broadband Initiative is delivering better connectivity to our rural and remote communities. The next phase will build on the success of that by providing infrastructure to rural homes, to farms, to schools, to businesses, and to health centres.

💬 Brett Hudson: We back these communities, Minister—we back them.

That is right. We back them, we represent them, and that is why this Government is getting this done and Labour would oppose it.

We are seeing a significant number of rural communities able to access fast broadband through upgrading the copper line network. So far, this has included upgrading copper landlines for more than 85,000 rural households to speeds of up to 20 megabits a second. For the last quarter, I am pleased to tell the House, the rate of deployment for upgrading copper lines for fast broadband is equal to about 46 lines every day being upgraded. The upgrade of fixed line copper broadband in rural areas is progressing incredibly well and it is meaning that our businesses and export sector can grow, innovate, and sell to the world, and we want to take that further because we back success in rural New Zealand. Better connectivity means access to cloud-based software and other benefits like high-definition video streaming, giving our businesses a competitive advantage.

The programmes and the regulatory environment are showing dividends in our international rankings. We are now No. 1 amongst all developed countries for annual growth of fibre connections, with an annual growth of 272 percent, and we are now ranked 15th out of 34 OECD countries. Do you know what it was in 2004 under Labour? It was 22nd. We have now gone from the bottom third of the OECD to the top half—it is making a difference.

Deployment in the first phase of the Rural Broadband Initiative has also seen a significant expansion of cellular coverage in rural New Zealand, with 113 new towers and 308 existing towers upgraded so far. We are establishing new towers at the rate of about one every 10 days, which is very impressive. Cellular towers have facilitated greater network coverage for mobile users to make and receive mobile calls and data on their devices. But it is not just about households and businesses, actually—38 out of 39 rural hospitals are now able to connect at a 100 megabits a second.

💬 Hon Member: How many?

It is 38 out of 39 of our rural health-care centres. Also, 972 rural schools are now able to connect, with peak speeds of 100 megabits a second, under the Rural Broadband Initiative, and 51 of our most remote schools have received point-to-point wireless connections. Because infrastructure established through the Rural Broadband Initiative is open access, it means that existing and emerging telecommunications companies throughout the industry and throughout the country can take advantage of this infrastructure to provide innovative services.

As we know, the bill enables funding to be made available for further improving rural connectivity by also establishing a mobile black spot fund, as well as extending the Rural Broadband Initiative programme. The mobile black spot fund will address gaps in cellular coverage, with a focus on transport corridors and tourist spots. This brings important gains for convenience and business productivity but also, importantly, for public safety through 111 calling accessibility from mobile phones in some locations away from landlines. This programme and the bill that funds it will bring fast, reliable broadband to more New Zealanders, to more Kiwi businesses, and to more parts of regional New Zealand.

The rural areas targeted for improvement will now be identified through a tender process, and technology solutions that will best meet the needs of those communities will be selected. It is worth noting that the technology to be used in the second phase of the Rural Broadband Initiative may not be the same as for the first phase. I am certainly open to technology suppliers providing new and innovative options to consider, and that is all part of the process we are now working through. A registration of interest has been released to obtain more information, and I encourage all rural communities to get involved. I encourage councils to take part and to talk to their households and businesses.

This Government’s vision is for a New Zealand where anyone, anywhere, can take advantage of digital opportunities, and we are not going to let only the highly densely populated, highly profitable parts of New Zealand benefit. That is why we levied the telecommunications companies to ensure that the infrastructure is strong right across rural New Zealand. This is a Government that works for all New Zealand, and that is why we are supporting this bill.

Well, Minister Amy Adams came into the House and she delivered her first speech on this bill. She said that this was not a tax, she said that prices would not go up, and she said that it was a mere extension to a levy. So what happened within 40 minutes? Prices were announced to be going up by one of the major telecommunications companies. It called it a tax and said that it was unfair and that there had been no consultation. And, in the most important part of the release that it sent out, it said: “We are exploring options for adding this cost in a transparent way to our customers’ monthly statements so they understand the contribution that they are making to the Government’s Telecommunications Development Levy fund.” Well, if that is not a demonstration of a new tax being imposed, then I do not know what is.

All I can say is that this Government said it would introduce no new taxes, but it has. This is the latest one, and it is going to go on everybody’s phone and internet bills every month because this Minister has not done her work. She has not consulted properly with the industry. She has not done an evaluation of the original rural broadband scheme. There is no evidence that it has been successful, despite what she gets up and says. InternetNZ, which came before the select committee yesterday, said that we could expect more petitions from communities around New Zealand that have very bad broadband speeds and are desperate to try to change that, and that there was no evidence that had been provided. The Ministry of Business, Innovation and Employment told us the same thing. It said that there was no analysis of the economic outputs or the benefits because it has not been done, and all we are hearing is that it is money that is being spent on rural New Zealand, but it could be going down a big, black hole. Here we are committing another $150 million from an industry levy that is directly being passed on to consumers—[Interruption] Oh, the Minister scoffed at me when I said that. But what happened? It is being directly passed on to consumers.

💬 Hon Bill English: Scoffs at you no matter what you say.

Mr English, an extra dollar a month on every consumer’s phone and internet bills is a direct result of a piece of legislation that is going through under urgency. That is a result. Whether it is a good result or a bad result is another matter. I call it a bad result, but it is a result that is going to put an extra dollar—so you give $25 and you take away $1. The Government has introduced three new taxes during this Budget. I would say that the Government and Amy Adams have got egg on their face—egg on their face. I would also say to the National MPs who are in the House right now and who live in rural electorates that they would know that they are having—particularly Stuart Smith in Kaikōura and Barbara Kuriger, who are two that I know of who are having steady streams of constituents coming in from rural New Zealand, saying that the quality of their broadband is inadequate and please do something about it. I would imagine that there are many other rural MPs who are saying the same. Well, I say to them that this legislation, which commits $150 million of a levy on industry being directly passed on to consumers is not going to make it better, because the first scheme has not been evaluated. There is no evidence that said it has worked.

In fact, the information that we are getting is saying that it absolutely has not. And let me give you some examples. There has been a road trip undertaken by a group that calls itself Hills, Holes and Poles, which is a project that is part funded by InternetNZ and has been touring the country over the last few months in rural and regional New Zealand, looking at the quality of broadband experience that people are having. What it is finding is that for many rural Kiwis broadband remains frustratingly out of reach or unaffordable, which is despite successive Government policies, including the Rural Broadband Initiative. What they are finding is communities are instead doing it for themselves. They are not using the rural broadband scheme. They are coming up with community initiatives with local wireless providers, with trusts, and with providers to actually form their own community wireless schemes. They are doing, in some of the communities, really well.

But this is not Amy Adam’s initiative; this is not what she gets up and trumpets in the House. There are dozens and dozens of them and more are happening, but they are doing it themselves. What Labour would have done would be to support them to do it themselves better and faster. Instead we are having a Government imposed levy that will be passed on to consumers—

💬 Dr David Clark: A tax.

—a tax, which is not going to deliver, and that is the great tragedy of this. Even the ministry involved acknowledges that the work has not been done and that there has been no evaluation. It cannot be evaluated. Therefore, it cannot be decided whether or not it is a good idea to invest the extra $150 million. Actually, the most innovative rural broadband is happening, as I said, in communities around New Zealand, and there is one happening in mid-Canterbury, which is, ironically, right next to the Minister’s electorate. Maybe she should go and visit that. One of the problems with the telecommunications development levy, which is highlighted in the regulatory impact statement, is the expectation by the major payers that the funds will in large part be recycled back through them.

I note that the Green Party has introduced two Supplementary Order Papers that we, the Labour Party, will be pleased to support during the progress of this bill through the Committee stage. We will be keen to debate those Supplementary Order Papers and what the impacts are, because one of the issues that lies behind the lack of evaluation and the lack of economic analysis in this legislation is knowing whether or not the recycling of funds back into the big players, such as Vodafone and Chorus, has actually, in effect, ended up being a subsidy to those players and has enabled them to entrench their status out in rural New Zealand. I am not making that assertion in the House tonight, but I am asking the question and the problem is that we do not have the answers because we have not been able to have the analysis about this very matter, and that is a great shame.

Another example of what communities are doing for themselves is in Marlborough. The Marlborough District Council has just managed a survey, and 700 people have responded to its online survey on connectivity, which is a very high response for a community. As I understand, it is four times the number of people who have engaged in the long-term district planning process, which indicates that there is a high degree of interest out there in rural New Zealand. I challenge any of the National Party MPs who have got parts of their constituencies that are rural to tell the House that they do not have people coming into their offices on a constant basis or writing to them about the state of their rural broadband. Colmar Brunton has done a survey. They have come up with the figure of 68 percent of rural businesses and households in New Zealand that are angry and frustrated about the state of their broadband. After nearly 5 years of the first scheme, you would think that things would be better than that and now the Government is introducing another $150 million for a failed scheme.

Very briefly, I would like to make two points. One is that I would have thought that the Opposition understood competition. I thought competition was actually a good thing—that if you provided competition within telecommunications companies and had more than one company, which would actually be a monopoly, the companies would do everything that they could to appeal to customers. They would provide the best possible service so that they can actually get more customers. Oh, but no, those members are in the Labour Party. They had a competition and they ended up with Andrew Little. Ah, that is the reason why they do not understand competition—OK, I get it now.

This is a great bill. I was actually despairing when I saw on my Facebook a post that a friend had made. She is visiting. She is the manager of New Zealand Tourism in Korea. She is here with a bunch of travel writers. They have been here for a week, I think, and they could not access the internet properly in our rural areas. These are people with millions of followers, but because they have been travelling in our beautiful country—what good is beauty when there is no internet and these people are travel writers? They finally got to a place where they could actually tweet, and this is the photo that I got.

I will not lament the day that we have very fast internet. This is a great bill for the rural sector. This is a great bill for New Zealand, where businesses will grow, families will benefit, and New Zealand will actually benefit as a whole. Thank you very much.

There has got to be some irony in the previous speaker, Melissa Lee, getting up and decrying the Government’s broadband system. It has spent nearly $300 million and the member opposite, who is a Government member, is saying that it is appalling, and she is right—she is right. That is the kind of confession from a Government that is so out of touch it thinks it can tell New Zealanders it is spending $300 million of their money and deliver no result. That is what we have opposite. Honestly, this is reaching a ridiculous standard. But, Mr Speaker—I think, with my voice cracking like that, I am going to turn into “Mr Squeaker” myself—I do not want to speak about that; what I want to talk about is the contribution from the Hon Amy Adams, the woman in charge of the Telecommunications (Development Levy) Amendment Bill.

The Minister for Communications said in her speech introducing the bill, and I will read it, that “the industry will not need to put their prices up, or explain to their customers why the bill is changing.” Those are words from the Minister’s mouth. Let me read them again: “the industry will not need to put their prices up, or explain to their customers why the bill is changing.” Well, we have learnt during the debate that the big provider, Spark, is going to put up its bills, and it is going to do it in a transparent way so that people know how much extra the Government is charging for this broadband service. It is going to put up its levies. It is saying: “Now that the Government has confirmed the levy will continue, rather than reduce as originally legislated for, it has put upward pressure on future costs and we will have to pass that cost through to our broadband and on-account mobile customers. We are exploring options for adding this cost in a transparent way to our customers’ monthly statements so they understand the contribution they are making to the Government’s Telecommunications Development Levy fund,”. That cost is going to borne by every business, broadband, and mobile customer. That will be across all of the firms, and that is because this Government is so determined to ram this through that it has not consulted on the legislation. It is just going to impose a new tax on all New Zealanders who are interested in using these kinds of internet services.

That is what this Government does, because it is so out of touch. It is breaking its promises. It had those promises that, of course, we remember: that this Government would return to a surplus. That was its big promise—its central promise in the last election campaign. Well, we found out yesterday. We were told to wait—we were told to wait for the surprise. Well, the surprise was no surprise. For the seventh time in a row this Government has failed to deliver a surplus. It keeps promising it. It keeps promising it—always jam tomorrow. The wage rises—the Government has broken that promise. It said that it would deliver an average increase of $7,000 by 2016; now it is saying that increase will not be delivered until 2019. It is leaving it to the next Government to deliver the wage increase. This is a Government that cannot keep its word any longer. It did it with the GST increase. If we think back, John Key said there would be no increase in GST, and then, lo and behold, once he was elected, up it went to 15 percent. That was at the same time, of course, that the Government delivered those tax cuts to the wealthiest New Zealanders.

Well, middle New Zealand is struggling every day, going out to work, trying to pay the bills but getting behind because this Government does not have its concerns at heart; it has at heart only the interests of the 1 percent. They are the very, very elite; those who have the capital from a previous generation. They are all it is interested in serving. It is not interested in the people who go out every day and work hard to try to get ahead, to try to look out for their families. On this side of the House we are—on this side of the House we are—and we are upset that the Government has broken its promises, because it was elected on those promises. It was elected on the promise of a surplus. It was elected on the promise of increasing wages. Now it is not delivering. It said it would introduce no new taxes—we have had three in this Budget. We have had three in this Budget.

I will read again from the departmental disclosure statement that the Ministry of Business, Innovation and Employment put out and that the Minister will have seen. It asks whether there are in this bill any charges in the nature of a tax. In section 4.2, it asks: “Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?”, and in big bold capitals it says next to that “Yes”. Yes, this is in the nature of a tax. Now we hear that the telecommunications providers are going to pass it on to their consumers. That makes a lie of what the Minister said. The Minister said “the industry will not need to put their prices up, or explain to their customers why the bill is changing.” This is a Government that is so out of touch it thinks it can introduce a new tax after saying it would not. It thinks that it can say that surplus is its central promise and then not deliver on it. It thinks it can say wages will go up for hard-working New Zealanders and then not deliver. And we learnt yesterday, of course, that Working for Families is going to go down for many families in middle New Zealand. They are going to be further, further behind. Sure, it is really good that beneficiaries are getting a little bit extra, but it should not be the case that that little bit extra is taken out of the pockets of those who are just a couple of rungs further up the ladder. That is not fair. New Zealanders know that is not fair. They know that these promises are promises that have been broken. This is a Government that can no longer be trusted to keep its word. This is an appalling, appalling state of affairs, and New Zealanders will be rightly upset about it.

We know, of course, that InternetNZ has called for a review. Its representatives came to the Commerce Committee yesterday and they said it would be really helpful if the Government or the select committee or anybody—actually—would take a lead on investigating what has happened with the Rural Broadband Initiative part 1. That is what they said. They said that some leadership would be great. Let us see whether it worked or not. Let us see, when you spend $300 million as a Government, whether there is any effect. The Government is not interested. It is not interested. It does not want to be held to account any more. It can spend hundreds of millions. It does not need to account to the taxpayers or the voters—that is how out of touch it is. That is how far removed from the truth it is. That Government over there will reap the public displeasure as the public see their bills go up for this Rural Broadband Initiative while many of them cannot access it.

The other thing I want to say is that I recently read that Ashburton has one of the best rural broadband connections in the country. I have been to Ashburton. Its connection is not that good. If that is the best that this Government can deliver, it is appalling. New Zealanders deserve better than that. Now the Government is throwing more money at it, but it is not going to test whether it is actually getting to where it needs to get to. My colleague Clare Curran has calculated that for every connection that has been made so far it is around $7,000 that the Government has forked out. Are New Zealanders feeling better off for that $7,000? Well, they are actually going to be charged extra on top of that—about another buck a month for every kind of connection, whether they have got a business connection or a personal connection. That is what they are facing now because new taxes are being introduced by this Government. It is a Government that is out of ideas, that is breaking its own promises, and it does not have a plan.

The Government has not articulated how it is going to increase exports. It has promised an increase to 40 percent of GDP. Well, actually, under its watch, exports are going backwards. They used to be 30 percent. They are going backwards. Treasury predicts that they will go backwards further—that next year exports as a percentage of GDP will drop further. Exports are becoming a smaller portion of the economy under this Government. It is no wonder that fewer small businesses are starting under this Government. It is a Government without ideas. It is determined to carry on with the commodity price cycles. It thinks that is the only answer. Well, it is not. We need vision. We need aspiration. We need a Government that will keep its word. We need a Government that will be keeping its word and will actually deliver on the promises it makes. This Government seems determined not to do that.

This Government is so out of touch it thinks it does not even need to answer to New Zealanders. It thinks it can introduce a tax and then say it is not its problem. It thinks it can reduce Working for Families for hard-working Kiwi families and say it is not its problem. This is a Government that is out of touch and out of ideas.

It has also brushed off, we learnt, a housing idea from the Labour Government, but it has not done the research. We saw in the Budget documents that there is $52 million in a capital contingency fund. When I worked at Treasury, the things that went in the contingency fund were things that had not been thought through yet, that could not be quantified, from a Government that had not done its work. The Government was responding to the polling at the last minute. It set up a contingency fund and said: “We will do something about housing. We’ve got to do something—the polls are telling us it’s a real issue.” Six years on, having done nothing, the Government has put a little bit of money to one side. It is going to be a long time before that solution gets implemented. This Government is out of ideas. It has got no long-term plan. It is a Government that is breaking promises left, right, and centre, and it will be held to account.

For the edification of the member David Clark, who has just resumed his seat, the telecommunications development levy exists today. It has existed since 2011. It is already built into the pricing packages that businesses and consumers pay today. The change here does not increase it. It is the same rate as it is today. It merely extends the number of years that it will apply for. So, look, Spark is entitled to send whatever message it wants, but if it wants to send a message to its customers that a levy they are already paying for is going to be charged again, then it risks its customers saying to themselves: “Different brand, same old Telecom.” I will leave them to decide whether or not to do that.

This is an extremely good measure that supports rural New Zealand, and I commend it to the House.

Kia ora, Mr Assistant Speaker. It is not often I find myself in the same voting position as the National Party, but the Green Party and I will support good legislation when we see it. I am not going to stand here and make a political point at the risk of not actually providing internet access to New Zealand communities. I support the roll-out of the Rural Broadband Initiative. I want to see our farms, our regional schools, and our communities across provincial and regional New Zealand accessing the internet, and I thought that the Labour Party did too. We have seen a passionate call around taxes. I know that Labour is, rightfully, trying to hold the Government to account for previous statements, which is right, but let us not buy into a frame where taxes are all bad. I support collective community capital investment to rectify market failure. I support that, I think it is the right thing to do, and that is why I am voting for this bill.

It is right to criticise the Government for putting the cart before the horse. It is currently consulting on the roll-out of the Rural Broadband Initiative 2. It is currently consulting, and here it is putting legislation in front of Parliament and passing it under all stages. I have suggested to the Minister for Communications that it is putting the cart before the horse and that the Government should have put it the right way round. It is obviously not doing that, which is disappointing because the industry is not going to get a say and the public is not going to get a say. In fact, the officials had advised: “Well, at least the industry will get a say during the parliamentary process.”, but when you are passing a law in 24 hours, that is a big fat “No” to the industry.

The Government also has not addressed the critical, concerning question of the existing Rural Broadband Initiative, which is whether this is just going to be another big subsidy for Vodafone or for someone else. The Labour Party is right to question this. When you divide the anticipated number of customers of the wireless system run by Vodafone—around 8,000—by the $60 million it got, it is an incredibly high $7,500 per connection. Those figures might not be correct because the Government and the officials have not released the exact numbers. It seems they are worried about doing that. It seems they were short-sighted to not include it in the contract. But if they are not the accurate numbers—if it is not costing $7,500 per connection—the Government should front up and give us the statistics.

We do not want to see another massive subsidy paid for by Vodafone’s competitors to another one in a different scenario. That is why I have put forward a solution—Supplementary Order Paper 83—and I appreciate the Labour Party’s support and the support of New Zealand First for it. What I want to promote is the idea that the Minister must have regard to competition and diversity in the regional markets. I think these are good, reasonable things that all parties should support. The Minister has intimated that this is her thinking and her direction. Well, if that is the case, the Government members should have no problem in supporting this Supplementary Order Paper.

The officials also warn, in section 17 of the regulatory impact statement, that it is likely the large telecommunications companies, which are currently contributing the most, are the ones that will be most likely to benefit from this. There are fantastic regional solutions happening right now, and the Government should not be ignoring them and just going to some of the big players.

New Zealand is a challenging country in which to roll out considerable coverage of broadband. We have got topographical and other issues. Locals all across the country are already coming up with those solutions in their communities with their local councils and with local experts. Let us not sideline them. Let us, in fact, not compete them out of the market with a big-scale Rural Broadband Initiative - funded competitor. I hope that the Government can support the Supplementary Order Paper. I hope the Government can have a contestable fund that some of the smaller players—the real locals on the ground—can have, and the first step to getting there is supporting the Supplementary Order Paper.

I am voting for greater internet access. I am voting for coming together and acting in a communal fashion to invest in new capital infrastructure. I am supporting that, and that is why I am voting for this legislation.

Kia ora, Mr Assistant Speaker. I am going to admit that I was not looking forward to coming down and speaking on this bill because it was not that controversial. It was not that controversial, but I have got to say that it has taken an interesting turn. The comment I would give to Spark is: oh, come on! Come on! I went back and looked, and this levy was originally passed before the 2011 election, so New Zealand First was not here, but I think the voting was interesting. The voting was interesting when you actually go back to the votes that were taken. I am going to give the Labour Party points for consistency because it voted against the levy then. So well done, because it voted against it then. The Green Party voted against it then, but the Green Party has obviously shifted its position because it can see that there has been some movement. We have to get this rolled out—we have to get this rolled out. How much longer can rural New Zealand stop and wait for this Parliament to make up its mind? Something has got to be done to actually connect these people. They have been promised it long enough, and we need to make it happen.

But the most interesting thing about the vote on this legislation before the 2011 election was that it split the ACT Party. The ACT Party had three members vote for it and two members vote against it. I wonder whether Mr Seymour is going to split over this vote. Is this going to put Mr Seymour into some sort of a tizz? We never know.

There is another comment that I think is most interesting, and this is why I say to Spark “Come on!” and to the Labour Party “Come on!”. Do not tell me that a company the size of Spark does not have the Minister’s telephone number on speed dial. Do not tell me that a company the size of Spark cannot reach out to this Government and tell it what it thinks; that it does not actually have dinners with this Government to tell it what it thinks. To say that there has been no consultation on what is just an extension of a bill from 2011 is pushing the bounds of believability—it really, really is pushing the bounds of believability.

Spark is being disingenuous. I have not seen Spark’s press release. I am going to take the member’s word for it that Spark has said that it is going to pass this on to the customer. But if that is what Spark has said, then I want to suggest that Spark is pushing both sides of the same horse here. In 2013 members on this side of the House fought to stop an increase in copper pricing to subsidise rural broadband roll-out and to subsidise fibre. We fought against it. But Spark just—and this is when we are talking about; we are talking about 19 May 2015. Spark Chief Executive Simon Moutter said he was encouraged by the public’s response to its campaign to cut copper broadband costs. You cannot have it both ways. If we want to keep the copper price low—and we should keep the copper price low because it is not right that those customers who have remained on copper need to subsidise those customers who can afford and who get fibre. So if Spark wants us to argue on this side to keep copper pricing low, you cannot come out in the next minute and decide you are going to up the prices when a levy you have already priced on, that you already knew was coming, and that already, way back here—when is this article from? This is from 5 January 2015. Spark had a conversation with the Commerce Commission around its final decision on the liability allocation for telecommunications providers. Please do not argue that you did not know. I fully understand that you may have budgeted for more profit going forward when you believed that—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

Beg your pardon. I fully understand that that business may have budgeted for more profit going forward when it believed that the levy was going to drop to $10 million in 2016, as that was the promise made. Take your issue to the Government; do not take your issue to the people of New Zealand. Take your issue to the Government. If it misled you, then take it to the Government, but there is no need for Spark to raise its prices. And I agree with the Minister that if it does so when this bill goes through, then it does so disingenuously. It cannot have it both ways.

As for the digital literacy inquiry, I am sorry, but I find it interesting that Ms Curran, who sat on the digital literacy inquiry and at the time pointed out that rural New Zealand was missing out, that lower socio-economic areas of our urban cities were missing out on broadband, and that there was a delayed roll-out because the big players were actually going where the money was and where the number of connections were—you cannot argue that there are not enough connections and so therefore they are not valuable if, at the same time, you want us to put that provision into those areas so that there is the capacity for those people to connect. That will be happening once we find a method by which they can actually afford to connect—that is the first thing. And, also, how can you therefore argue against a tender system that says that all areas now will be decided through a tender system rather than the telecommunications companies deciding that if there is a whole group of rich people sitting in that space who can pay the bill, who will download a lot of internet, then the companies will actually go and put the signal into there? I cannot understand the Labour Party and its position at this moment, although its position is consistent.

And although I certainly want to use any opportunity I can to have a go at the Government about breaking promises—and I will mention it again, if the Government broken a promise to you, the telecommunications companies, take it up with the Government. But to suggest that this levy is new is just beyond belief. It has been here since 2011. This legislation is an extension of the levy. It is an extension. The reason why it is an extension—and unfortunately this might turn the Labour Party right off New Zealand First—is because of Northland. One of the reasons why—

Sitting suspended from 6 p.m. to 7 p.m.

At the time I was interrupted I was launching into a bit of a tirade, one might perhaps call it, around Spark. I want to let the directors of Spark know that Mr Conor Roberts earns his money because within 1 minute of me sitting down Mr Roberts emailed me to make sure that I had a copy of the press release to make sure that I knew what it was that I could not believe Spark had said. However, I still do not believe that you said it, but thank you very much, Mr Roberts. I really appreciate it.

Can I just read this other little bit about what this levy pays for. We have gone on and on—it has been on and on—about rural broadband and the mobile black spots. They are incredibly important, particularly the mobile black spots, and particularly for Northland. I think I was referring to the fact that on 12 March 2015 in Kerikeri “the Prime Minister confirmed funding of $100 million to extend the Rural Broadband Initiative, and $50 million to fix mobile phone black spots in remote places around the country.” One cannot say that the industry did not know it was coming, I would have thought. This was back in March. So all the way along the industry has known that this is what is coming. So to say that it was not consulted, to say that it did not have an opportunity, is disingenuous.

The last thing before I sit down, because I know there are other members absolutely gagging to stand up and talk to this bill—and I will have more to say at the Committee stage and at the third reading—is that I just want to read this out from the Telcoreview.co.nz website to make sure that we all understand that this is not just about mobile black spots and it is not just about rural broadband. It says this “levy is used to pay for telecommunications infrastructure including the relay service for deaf and hearing impaired persons, broadband for rural areas, and improvements to the 111 emergency service.” These things are important to New Zealanders. They were concerned at the time when it was removed. It is interesting that it is now being suggested that the cost will be passed on and that it is onerous to the consumer. It was originally a cut in cost in 2011 from $65 million to $50 million.

As I say, New Zealand First does not just agree with the Government because we wish to agree with the Government; we are here to hold them to account. But the reality is that New Zealand First will not just stand and oppose legislation on a political basis. This is a levy that is being continued. It came in in 2011. The telecommunications companies need to take it up with the Government if they have a problem. There is no need for them to increase their pricing. So, Mr Roberts, I hope to see you next week in my office probably, but at this stage please reverse your press release. Kia ora.

It is my privilege to stand and contribute to the second reading of this bill. I agree with what Tracey Martin said. It is a very good bill from this Government.

This Government is working to ensure that all New Zealanders are connected to the latest technology. I congratulate the Minister, the Hon Amy Adams, on bringing this bill to the House. I hope all New Zealanders will appreciate the work that this Government is doing. I commend this bill to the House.

The next call is a split call. James Shaw—5 minutes.

I am standing to speak on the second reading of the Telecommunications (Development Levy) Amendment Bill. I just want to address the concern that this bill is a new tax on New Zealanders or on users of broadband services. Frankly, the Minister of Finance over the last 7 years has introduced so many new taxes and raised so many other taxes that I have kind of become a little bit blasé about it.

This is an incredibly important piece of economic infrastructure, particularly for rural New Zealanders. We have a huge economic divide between our regions and our main centres, especially Auckland. It is absolutely vital for the regions that we get them connected to broadband and that it is a really high-quality service. Only then will they be able to access the social connections, the educational opportunities, the health care, and in particular the economic infrastructure of being able to participate in the digital economy, which is a growing and increasingly critical part of New Zealand’s economy overall. It has to get paid for somehow. It is a huge and expensive project and somebody has got to pay for it. This seems to us to be the best available method of paying for it.

I do want to speak very briefly to the Supplementary Order Papers that my colleague Gareth Hughes introduced earlier—sorry, I just wanted to say before that that we have not heard anything yet in the debate that would have us change our vote on this bill. We recognise that there are some concerns from the industry. We also understand Labour’s concerns in relation to this being a new tax and so on, but at the moment our support for the bill still stands.

We are introducing two Supplementary Order Papers. The first, Supplementary Order Paper 83, if you do not mind my reading them out, is to insert a new section 90(4) into the Telecommunications Act 2001 where the telecommunications development levy is used for purposes specified in clause 90(1)(b) and 90(1)(d), and particular regard will be taken to promote “… (a) competition in non-urban telecommunications markets; and (b) the diversity of non-urban communities intended to be served by the levy; and (c) the range of different technological options that may best serve particular non-urban communities; and (d) the rapid pace of technological development.”

I would just like to speak to that because we did have some concerns that in the previous phase of the roll-out I guess the beneficiaries primarily were Vodafone and Chorus; that they in essence received a really significant subsidy, paid for by other industry players. We want to make sure that there is maximum competition and a diversity of providers in the market place, and that it does not benefit just a couple of large companies too much.

The second, Supplementary Order Paper 82, is to insert a new section 90(4) into the Telecommunications Act 2001. Where the telecommunications development levy is used to promote cellular mobile coverage in rural areas—for example, through a mobile black spots fund—the levy will not be used to fund any of the existing contractual requirements between the Crown and mobile network operators.

There is a risk that the Government’s telecommunications development levy - funded mobile black spots fund could be used to fund these from cheaper requirements. This would essentially short-change the taxpayer and the rest of the industry. Again, we just want to make sure that companies that have got these contracts already do not get two bites of the cherry. Again, it is about ensuring that there is a maximum number of players in this and that the benefit is sort of spread through the economy.

We think that those amendments are quite sensible, that they aid diversity and competition in the market place, and we hope that we can get support for them. In the meantime, I commend this bill to the House.

Kris Faafoi—5 minutes.

It is a pleasure to take a call on the second reading of this Telecommunications (Development Levy) Amendment Bill.

There are a number of questions that we have of the Government, which we will also ask in the Committee stage. The first one I will put to the Minister, and that is why in her first reading speech did she say: “The industry will not need to put up their prices or explain to customers why their bill is changing.”? For then, less than an hour later, Spark put out a press release saying: “Now that the Government has confirmed the levy will continue, rather than reduce as originally legislated for, it has put upward pressure on future costs and we will have to pass that cost through to our broadband and on-account mobile customers.”

So less than an hour after the Minister saying that this will have no effect on consumers and nothing will change, Spark says that, yes, it will, because it is going to make the consumers pay. Regardless of who was at fault—either the Minister’s wrong or Spark is playing silly buggers with this—someone is going to pay. It looks like it is going to be everyone who has a broadband account with Spark at this stage, and potentially more because we have not heard from any other telecommunications companies at the moment. It further emphasises our point that this is a new tax.

Further to that, in the regulatory impact statement, put out by the Ministry of Business, Innovation and Employment on this bill, point 50 talks about the level of consultation that the Government has had with the Telecommunications Forum. It says that “While formal consultation … has not been undertaken, MBIE regularly engages with the telecommunications industry, and as such the issues considered by this Regulatory Impact Statement have been widely canvassed … MBIE has monthly meetings with the New Zealand Telecommunications Forum (TCF), which represents levy payers and others in industry … ”. Point 51 says: “The intention to continue the levy at its current level was communicated openly during the election campaign …”.

So from that regulatory impact statement you would think that the telecommunications companies know they are pretty OK with that. The Telecommunications Forum has been informed. It has got no problem with this bill and the implications of it, but, lo and behold, not only has Spark put a press release out today, the Telecommunications Forum has put a press release out this afternoon as this bill makes its way, under urgency, through this House. Geoff Thorn, the chief executive of the Telecommunications Forum, says: “This bill has been introduced under urgency and doing so avoids any public debate.” We agree with him on that. He also says: “This is a proposal which has not been the subject of any consultation …”—but the regulatory impact statement said there was consultation—“and which has avoided the usual scrutiny that would apply to Government spending.”, which we do agree with.

This bill is being pushed through under urgency and we would ask why. If, as the Minister says, this has been signposted and, if, as the Minister says, there has been consultation with the Telecommunications Forum, that does not necessarily look like it was the case.

The press release from the Telecommunications Forum goes on to say: “The bill extends a tax, which to date, has not been explicitly recovered from consumers.” So the Telecommunications Forum itself says, well, in the past it had not got this money from consumers. So the assertion from the other side of the House is that this is not going to hit consumers. From this perspective, Spark has said it is going to put up its prices. The Telecommunications Forum has said, well, it has not done this in the past. So someone is going to pay, and it is not the Government. This Government said that there are no new taxes but, when it continues this levy, someone does have to pay and they are the broadband users of New Zealand.

I would like to reiterate that we have no problem with rolling out broadband further into rural areas. It is a great idea, but the $300 million that has been spent so far—we do not have any idea of how effective it was. And before we spend another $150 million—we do not think we should be rushing this through under urgency until we make sure we are going to get good value for money. That is why we are opposing this. This Government just wants to throw money around—another $150 million—without knowing how effective the first tranche of the Rural Broadband Initiative has been. We do not think that is on.

The money that has been spent has been so effective that 74 percent of rural households now have broadband. That is how effective it is, and, frankly, it is only going to get better under this Government.

I feel sorry for the Labour Party. It is the only party that is voting against rural broadband for New Zealanders who need that for their businesses, for the schooling of their children, and for them to be connected to the rest of the world like the rest of us are. It is disgraceful that a party that used to say it stood for telecommunications and broadband is now voting against the bill. It is the only party—disgraceful. I think about the fact that we are talking about it being an extension of a levy that has been in place now for some years, not some new thing just dreamt up, and the only person I see who has really come out against it is Mr Conor Roberts, who has not been that long with Spark. I remember him from his days as an often-failed candidate for the Labour Party and also with Len Brown’s press office. So I think that Mr Conor Roberts is a very nice chap and I wish him well in his career, but he needs to get his facts right.

I commend this bill to the House.

Well, that does deserve a reply. That member, Judith Collins, used broadband repeatedly in respect of her dealings with Cameron Slater, where she showed herself to be morally bankrupt—which is why she is now on the backbenches.

💬 Hon Judith Collins: I raise a point of order, Mr Speaker. I take offence at that.

The ASSISTANT SPEAKER (Lindsay Tisch): Yes, the member has taken offence. I ask him just to withdraw that comment.

Point of order, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): No, I ask you to withdraw that comment.

Point of order—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member has taken offence. Any member can take offence, and if a member takes offence, I ask the member to withdraw the comment.

I withdraw the comment. I raise a point of order, Mr Speaker. Could you please tell me which of my comments was unparliamentary?

The ASSISTANT SPEAKER (Lindsay Tisch): The member took offence. It is not for me to judge. The member took offence at statements that were made and she brought it to my attention. On that basis I have asked you to withdraw the comment, which you have done, and now we will proceed.

That member, who just criticised a person outside of the House who was unable to defend themself, was removed from her post as a Minister for disreputable conduct. There were about five or six instances—

💬 Hon Judith Collins: I raise a point of order, Mr Speaker. I take offence at that. I was not removed for disreputable conduct. It is completely false.

The ASSISTANT SPEAKER (Lindsay Tisch): That is a debating point—[Interruption] That is a debating point, and we are going to proceed.

—the first of which was the conflict of interest that she had in respect of Oravida, which was a company that her husband got paid by, and she took steps to advance their interests and then lied to the media and misrepresented the position to the Prime Minister. Having showed herself—

The ASSISTANT SPEAKER (Lindsay Tisch): Order!

💬 Hon Judith Collins: I seek leave to make a personal explanation, in accordance with the rules, in relation to the accusations made by the Hon David Parker.

The ASSISTANT SPEAKER (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.

💬 Hon Judith Collins: Mr David Parker is quite incorrect. I was not removed for disreputable behaviour. In fact, I was asked to resign on the basis that I was accused by way of an email to somebody else from someone else. It had nothing to do with me. There was an allegation for which I was utterly cleared by the Chisholm inquiry. In addition, Mr Parker has long commented on a Mr Pleasance. That matter has been dealt with by the Privacy Commissioner. I have been cleared of that as well. I was cleared by the Cabinet Office of any conflict of interest, and, actually, Mr Parker knows that well. He, of course, did resign as Attorney-General.

The ASSISTANT SPEAKER (Lindsay Tisch): All right, we are now on the Telecommunications (Development Levy) Amendment Bill and I ask all speakers from now on in to concentrate on the substance of that debate.

What rubbish! That is not correct at all. History shows that that is not correct.

This bill is said by the Government not to be in the nature of a tax. We heard that from the Minister at first reading and at second reading. Yet in the Ministry of Business, Innovation and Employment’s own departmental disclosure statement it is asked a form question. It is asked: “Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?”. In bold writing and capitals on page 8: “Yes”—yes. The Minister then said that this would not result in any increase in charges to consumers, and yet already we have a press release from Spark saying that it will; the average person’s bill will go up by about $1 every month. That is $12 a year for an increase in a connection fee. To quote Spark: “ ‘The bill for this from the Government to Spark New Zealand averages out at almost $1 per month for each of our consumer and business broadband and mobile customers.’ ” So that is for people who are using bandwidth both in broadband at home and also through mobile devices.

Everyone, I think, in this Parliament recognises that the roll-out of broadband is a good thing. No one disputes that. What we do dispute is the competence of this Government, which just months ago was saying that it was going to cost only $10 million a year—in respect of this particular cross-subsidisation—to roll it out across rural areas, whereas now it is saying that that cost is going to be $50 million per annum. This is in an environment that, as the Government says, has virtually zero inflation. So in an environment where inflation is running at zero, how come the costs have ballooned so that the cross-subsidy that has to be paid through this mechanism has risen from $10 million per annum to $50 million per annum? The answer is that the Government is doing it incompetently. That is also apparent from the fact that the Rural Broadband Initiative is being ignored by some consumers, who are going around the side of that, not getting the cross-subsidy that is available through the Rural Broadband Initiative. Instead they are, without subsidy, going about their business and using wireless technology to get broadband.

That is why we are opposing this bill. If the Government had come to New Zealanders at the start and said “Look, this is the full cost of the roll-out of broadband. There will be some cross-subsidy between cities and rural areas to ensure that rural areas will get it.”, I think all New Zealanders would have gone along with that. We certainly would have on this side of the House. But to then come along and pretend that a failed Rural Broadband Initiative, which is now coming in over the original budgets, obviously, and is not doing what it was originally promised to do—to come to us and say “Oh, look, please, there is nothing happening there that needs scrutiny.”, well, we just do not buy that.

Here we are under urgency. We heard one of the prior speakers from the National Party throwing off at the release from the New Zealand Telecommunications Forum, the TCF. That release complains that “ ‘This Bill has been introduced under urgency and doing so avoids any public debate.’ ” That is why this is being done under urgency. It is not because it is urgent. This measure does not take effect until next year, so it does not need to be done under urgency. Now Government members slag that off. Do you know who the writer of that press release was? It was Mr Thorn, the former chief executive of the Parliamentary Service. He knows how parliamentary processes are meant to work. That is why he is critical of this being done under urgency. He also notes that it “extends a tax, which to date, has not been explicitly recovered from consumers.”, and that the industry cannot continue to absorb the tax.

The Minister for Communications will soon be sitting in the chair during the Committee stage, and I want the Minister to stand up and tell me that I am wrong when I read out the departmental disclosure statement at paragraph 4.2, which asks “Does this bill create or amend a power to impose a fee, levy or charge in the nature of a tax?” and answers “Yes”. I would like her to tell me how I am misreading that, because I cannot reconcile that with her statement that it is not in the nature of a tax. Look, I do not know. This is the Minister for the Environment, who seems to think that dirty water is clean water—[Interruption] She did when she was the Minister for the Environment—so maybe there is some consistency of principle between those two ridiculous statements.

I also want to say that she is still contending that there is going to be no on-charge to consumers. I cannot work that one out, either.

💬 Dr David Clark: Industry says there is.

I know the industry says there is; I have read that out already, as you did earlier, Dr Clark. It is absolutely clear that this will result in an increase in charges.

It is a tax. It is because the Government’s financial performance is so poor that it can no longer absorb the Rural Broadband Initiative through the Crown balance sheet. That is essentially what has happened. It was going to pay some of this out of Crown finances, but its mismanagement of the economy is such that it can now no longer afford to do so, and so it is going to charge what is effectively a tax on consumers. That is what is happening here. The Government has not consulted on it. It says it has. I have no doubt that it consults regularly with the community but, again, in its regulatory impact statement and its departmental disclosure statement it says it has not, in respect of this. That is confirmed by the telecommunications industry in its releases today so, again, I expect the Minister to be saying how she can justify those comments when her departmental report says it is wrong and when we have had two releases—from both the industry body generally and from our largest telecommunications company, Spark—to say that that is not the case.

I just want to return to this issue of how incredible it is that the Government needs another $40 million per annum when inflation is running at virtually zero. How does that happen? The Crown says that the reason it is not hitting surplus is that we have got such low inflation that people’s wages are not going up as much as it thought they would, and therefore it is not collecting as much tax. There is a little bit of truth in that. We all acknowledge that with low inflation, wages and costs do not go up by as much. So how could you, in a zero-inflation environment, need to come along to this House and seek authority for $50 million per annum? I tell you what. It is because the Government is incompetent in respect of telecommunications companies. We saw it with the Chorus fiasco last year when it was going to override the regulator, when it was trying to help out its mates at the big end of town. The telecommunications companies came out and spoke out against the Government at that stage. And what are they getting in response? Because they spoke out last time, they are now getting whacked with a levy of $50 million—because the Government did not like them exposing the incompetence of the Government last year in the telecommunications space, in respect of Chorus. That is why the Labour Party is opposing this legislation, not because we oppose the roll-out of broadband in rural areas.

I commend the bill to the House.