Telecommunications (Development Levy) Amendment Bill

We have two amendments on the Table: one from Gareth Hughes and one from James Shaw. Although not the same, they are quite closely related, and I propose to the Committee that we debate the two Supplementary Order Papers, Nos. 82 and 83, together but vote on them separately. Is there any objection to that process?

I just wanted to speak briefly to these Supplementary Order Papers. We did speak, earlier on in the debate, about the Supplementary Order Papers that we will be introducing. If you would just allow me to read from the Supplementary Order Papers, the first one, which is in the name of Gareth Hughes, adds new clause 3A, which is to amend section 90 of the Act, “Crown use of telecommunications development levy”. After section 90(3), it would insert subsection (4): “The Minister must ensure that any use of the telecommunications development levy for purposes specified in subsection (1)(b) or (d) promotes—(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.” The second Supplementary Order Paper, which is in my name, would amend section 90 as well and inserts “(4) The Minister must ensure that any use of the telecommunications development levy for the purposes under subsection (1)(b) or (d) does not fund any person to meet their existing contractual requirements with the Crown.”

I would just like to speak very briefly to these Supplementary Order Papers. Earlier on in the debate, I tried to discern what the different objections were, and the Labour Party has raised a number of extremely pertinent questions about the bill. One of those is to do with the evaluation of and reporting on the effectiveness of the existing Rural Broadband Initiative. That is, essentially, the intention of Gareth Hughes’ Supplementary Order Paper, which is to ensure that new technologies that are emerging and the pace of that change are taken into account in order to ensure that there is competition and diversity of players in the market place. The Supplementary Order Paper will ensure that the needs of the local environment and the local communities, and some of those variances between places, are taken into account so that we do not have a one-size-fits-all approach.

Earlier on in the debate, Mr Cunliffe used the example of Mount Cook, saying that we are not necessarily going to lay a massive ultra-fast broadband pipe to Mount Cook, because there are not enough people there. But there are a range of technologies that we might consider. As an example, people have used balloons or mobile telephony, and so on. The intention behind this Supplementary Order Paper is, essentially, to ensure that these funds raised are used wisely and that they encourage a market-oriented approach, as opposed to favouring just a few big companies.

The intention of the second Supplementary Order Paper, in my name, where it says “The Minister must ensure that any use of the telecommunications development levy … does not fund any person to meet their existing contractual requirements with the Crown.”, is to deal with a question raised about how Spark and Vodafone—particularly, when they were awarded earlier contracts with the 700 megahertz spectrum—got a lower price because they made a commitment to install black spot towers in return for a better price. We wanted to ensure that the funds raised through this extension of the levy are not used to fund existing contractual requirements—essentially, so that those companies would not have two bites of the same cherry. That is the intention of those Supplementary Order Papers, and I shall rest here.

I would like to speak in support of the Green Party’s two Supplementary Order Papers. I suppose I would make the comment that this is the discussion that we would have been having in the select committee if we had been able to have a select committee hearing. In fact, I would argue that the Committee of the whole House stage tonight has been like a select committee hearing, although it has been fairly one-sided because the ability to have a proper debate with all of the parties has not actually occurred, which is one of our main problems with this bill. We are also unable, through this process, to hear from submitters representing consumers from different communities throughout rural New Zealand. The only chance that we have had to do that is through a select committee process with some petitioners from specific rural communities just outside of Dunedin who had very strong views.

With regard to the two Supplementary Order Papers before the Committee, I would argue that they hit some of the nails on the head, with regard to the concerns around the problems that lie with the existing Rural Broadband Initiative. The problem that I have, and that the Labour Party has, is that we are unable to judge the value of the existing Rural Broadband Initiative in these terms. It is only an amendment to the Telecommunications (Development Levy) Amendment Bill that goes forward for the next tranche of the Rural Broadband Initiative; therefore, there is no ability for there to be an in-depth discussion about matters such as diversity for non-urban communities.

I would contend that competition is one of the most important things here, and I just draw your attention to page 7 of the regulatory impact statement, to point No. 17, where it says that it is anticipated that much of the future telecommunications development levy funding earmarked for Rural Broadband Initiative extensions could be allocated to the larger telecommunications development levy players if they secure contracts to supply infrastructure for the Rural Broadband Initiative extensions. Well, right there is a significant issue. The whole purpose of the Rural Broadband Initiative, or one of the purposes, was for it to be open access—for the infrastructure to be built, but for there to be the ability for other players to come in and for there to be a competitive environment. We do not think that that has occurred; or if it has, it has occurred only in a very limited way. But we are not absolutely sure because there has not been a proper evaluation done. Here we have a regulatory impact statement telling us that the next tranche may be dominated by big players. If that is the case, then is that the best expenditure of the money?

The competition aspect of Supplementary Order Paper 83 is quite critical in ensuring that the different technological options that may best serve particular non-urban communities are available. With regard to that, I am not quite sure what that is referring to specifically, but I am hoping that it is referring to the fact that 5 megabits, which was offered in the initial Rural Broadband Initiative, is patently insufficient, particularly in the era of Netflix, where rural New Zealand is, basically, unable to access the new technologies and the new content offers that are coming into our country. It is urban New Zealand that is going to be able to access and benefit from those, and enjoy those things, and rural New Zealand is just not going to have the capacity. These are really critical issues, and they are critical issues that should have been teased out in a select committee, with the full ability for submitters to come before us. That is not going to happen. Instead, the shadowy entity that is the Rural Broadband Initiative is going to be allowed to continue on unchecked and with no accountability. We implacably oppose that.

I came down from my office especially to take a call, particularly on these Supplementary Order Papers, because of the fact that New Zealand First is hopeful. As a Wairarapa-based MP, I am very hopeful that this legislation, which New Zealand First is supporting, led by our MP Tracey Martin, will actually deal with those black spots. But we have had some concern over the years, looking at the way in which the roll-out of the Rural Broadband Initiative has been delivered.

As Mayor of Carterton and in my time there, it was somewhat frustrating, after all of the good news about the rural broadband roll-out and where it was going, to find that in places where you would expect there to be good coverage, astonishingly, there was not. I point to a little place in the Wairarapa called Greytown. It is a little place where you drive up State Highway 2, through Featherston, into Greytown, and the first thing you note when you come into Greytown on the weekend is the number of Wellingtonians who are there. You hear consistently in the hotels, the bars, and the shops, and at the festivals and the fairs, about how frustrated people get by their inability to use their cellphones to ring back to David Seymour or to anyone else in Parliament, or to anyone else in Wellington, or to anyone else in doing business. I would just hope that—

The CHAIRPERSON (Hon Trevor Mallard): Order! It is not at all hard to relate what the member is saying to the Supplementary Order Papers, but the member does have to do it in order to remain relevant.

Thank you for your guidance, Mr Chairman. I take confidence in this particular Supplementary Order Paper put forward by Gareth Hughes. Where it says “(a) competition in non-urban telecommunications markets”, that is us. Where it says “(b) the diversity of non-urban communities intended to be served by the levy;”, we would hope, given the number of small telecommunications companies in rural provincial New Zealand—small telecommunications companies that have a lot of experience in how to tackle the difficulties of getting good communications through rural New Zealand—that this Supplementary Order Paper would give them the opportunity to be involved and would allow them to compete, so that they can apply their extensive experience.

I can name probably half a dozen small telecommunications companies that are operating in the Wairarapa, but they seem to be shut out. There seems to be something in the process that forever and for always puts the delivery of the service, the provision of the service, and the roll-out of the broadband in the hands of a very small bloc—namely, Chorus. I would hope, if nothing else, even if the Government does not approve this—and I have got a strong sense that it is not going to vote for these Supplementary Order Papers—that it would still get the message, because it is heartland rural New Zealand that is actually suffering right now.

It is very frustrating for people there when they go to talk to WIZwireless—when they go to talk to some of the Māori telecommunications providers such as Tuarōpaki Communications Ltd up in the central plateau. Tuarōpaki Communications Ltd has invested very heavily in communications. In fact, it is a strong shareholder in 2degrees, but where did its roots start? Its roots started very small, in a small telecommunications company. The question is: would Tuarōpaki Communications Ltd and its derivatives, would the company that it is now a shareholder in—I think it is now working with Thinktank; it was with Timaru-based BayCity Communications—would these small telecommunications companies get an opportunity to have a shot without this clause?

I would hope that we would support this clause. I would hope that this clause would allow greater competition opportunity for the small telecommunications companies, which are experienced in rural New Zealand and in delivering services out to place like Akitio, Flat Point, and Tora. Those are the areas that are suffering dearly. The notion that we are suffering in Greytown is absolutely astonishing, and I would argue that so far the dependence on the major telecommunications companies to deliver this service has done Greytown poorly—very poorly. That in itself is a very strong argument for the Government considering making sure that these other rural telecommunications companies, which do have the experience, which are out there, which very often do the work for half the price and are a lot more productive because they are grateful for the business, and which do this service very well because they want more business get a better shot. And we believe that this Supplementary Order Paper would give them that opportunity and that it would give them an absolute assurance that they would be invited and asked to give it a shot.

I am grateful that our caucus is supporting this Supplementary Order Paper, and I am grateful to Gareth Hughes for putting it forward, because for far too long these small rural telecommunications companies have been ignored. For far too long the productivity they offer has been let slide by.

Kia ora, Mr Chair. Thank you very much. If I could just pick up where my colleague Ron Mark left off, with regard to these Supplementary Order Papers—specifically, the Supplementary Order Paper that Gareth Hughes has put forward, which is around making sure that there is competition in the non-urban telecommunications market and diversity in non-urban communities. Specifically, I would like to request that the Māori Party and the ACT Party cast their votes for these amendments—the ACT Party because it is a believer in competition and because that is what the party stands for: an open market. This is something that I cannot imagine the ACT Party would not support: making sure that all members of the telecommunications community have an opportunity to vie for these Government dollars, so that they can compete in a real market. I would also seek, and I am hoping, that the Māori Party might also support these amendments, because, again, this is about rural communities, rural workforces, and rural companies and small to medium sized enterprises. That is what these clauses are about.

In the last few minutes I have received an email with regard to these Supplementary Order Papers from Taylor Communications, which is the largest fixed wireless rural broadband provider in the Hawke’s Bay. It wishes to confirm that the charges of the telecommunications development levy will not result in extra costs being passed on to consumers. It says: “The telecommunications development levy (TDL) has been built in to our existing pricing and will continue to be done.” This is one of those companies. They pay the levy. They already pay the levy, these small telecommunications companies. But unless this Supplementary Order Paper goes through, there is no guarantee that they will be allowed to play with the big boys. The email continues: “It is well known that the previous $300 million has not been well spent, but with the new funding that is planned for the next few years, it will bring real results, bringing real broadband to rural New Zealand if it is distributed by our regional players. The New Zealand Wireless Providers Association is a collective of rural broadband providers that are applying for TDL funding. With no Government funding in the past, they have achieved over 50,000 rural subscribers, providing download speeds in excess of 5 megabytes per second.”

This Supplementary Order Paper supports those providers. I implore the Māori Party and the ACT Party to assist today and to stand by their principles of real competition, supporting Māori, and supporting rural communities. Vote for this Supplementary Order Paper to place this in the legislation. I am sure that they have the opportunity and the time to walk over and let the whip of the Government members know that that is the way they will be voting—thereby meeting the obligations of their agreement. Therefore, again, I implore the Māori Party and the ACT Party to stand up for what they believe in and to vote for this Supplementary Order Paper.

I move, That the question be now put.

I take great pleasure in responding to the previous speech by Tracey Martin and, in particular, to subclause (4)(a) of new clause 3A of one of the two Supplementary Order Papers currently on the Table, Supplementary Order Paper 83. The assertion is that people of a certain philosophical persuasion should be in favour of supporting that particular paragraph because competition in a particular location is always a good thing. There is some quite interesting economic theory behind this particular topic, relating back to the Nobel Prize winner who, sadly, died only a couple of years ago, Ronald Coase. Ronald Coase won his Nobel Prize primarily for his work on the nature of the firm. The story of Coase will take us directly to the matter at hand in subclause (4)(a). Is competition the only value that believers in free enterprise and economic efficiency should pursue? Or is economy of scale also a particularly important virtue that we should want?

Coase’s story was that he started as a socialist. He might well have found his place on the far left of New Zealand First, but, unlike those members, he was a thinking man, a very inquisitive man who knew to ask the right questions. What he did was he travelled from his home in England to, at that time, the centre of industry in Chicago, and he asked the people at General Motors: “Why is it that in a capitalist economy you practise an island of socialism, a firm where you have a dictatorship over a group of resources? Why do you do that when competition works so well? Why do you believe in so much economy of scale? Why might you, 80 years hence, be opposed to (4)(a) being inserted in this bill?”. And the answer—

💬 Chris Bishop: He definitely asked that.

He may well have asked that question had he been able to anticipate such a silly speech from Tracey Martin, but despite being a great man and a Nobel Prize winner, Ronald Coase was not able to anticipate Tracey Martin. Few of us would have been able to. The answer that Ronald Coase got from asking the right question, which eventually earned him a Nobel Prize, was that firms should expand. The nature of the firm is that firms should expand up until the point where the marginal transaction outside the firm has greater transaction costs than the marginal transaction within the firm.

This is something that is very, very difficult to determine by statute. It is something that must be discovered in the market place, and that is why the ACT Party is a believer in free markets but opposed to subclause (4)(a) in this Supplementary Order Paper. Interestingly, in the course of this inquiry—I hope they are learning something there—Ronald Coase discovered transaction costs. Transactions costs are one of the most important things to understand when it comes to being a true believer in free markets and economic efficiency. I do not think we will see that level of sophistication or understanding in some seats across the Chamber, but since I was asked, that is why I am opposed to this Supplementary Order Paper. I do not believe that it will increase economic efficiency or the welfare of New Zealanders in respect of telecommunications. Thank you.

I move, That the question be now put.

Motion agreed to.

The question was put that the amendment set out on Supplementary Order Paper 82 in the name of James Shaw to insert new clause 3A be agreed to.