CLARE CURRAN (Labour—Dunedin South) : I rise to speak to Part 1 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill and to express deep concerns about it. It is a dog’s breakfast of a bill and it contains serious flaws. It will promote anti-competitive behaviour on the part of Telecom with the new fibre monopoly that it creates. It is the result of a deeply flawed process—flawed advice and bad process—that is lacking in transparency, and it will result in a law that promotes investors’ interests at the expense of quality services and affordability for Kiwis in broadband.

Labour has introduced a number of amendments today to this bill and to the Supplementary Order Paper that the Minister for Communications and Information Technology brought to the House yesterday, in an attempt to address the core flaws in this bill. But before I mention them, I tell members that there is an urgent issue that needs to be cleared up, and I ask the Minister to address it as a matter of great urgency. The phone and internet bill is probably the third or fourth biggest bill that most New Zealanders pay every month, behind their mortgage or their rent, their electricity, and their food. The phone and the internet are not only essential but also substantial in terms of the bills people must pay. It is important for New Zealanders that they know what they are paying for, what the guarantees around it are, and where it will come from.

The Government and the Minister in the chair, the Minister for Communications and Information Technology, need to clarify urgently today that the structurally separated Telecom business delivering broadband fibre cannot be sold off to foreign interests and that its Kiwi share obligations will remain. I ask the Minister to address this issue urgently, because last-minute amendments to this controversial telecommunications bill appear to indicate that the Kiwi share obligations will no longer be operative following the structural separation of Telecom.

The Kiwi share obligation has protected New Zealand consumers for the last 21 years since Telecom was privatised. The provision has not been perfect and it has been updated several times, but it has ensured that Kiwis have access to a phone line at a standard rental, that they receive emergency services, and that Telecom cannot be wholly sold to foreign interests.

The Kiwi share is broader even than those performance standards, those obligations, and the foreign-ownership issue. It is the public’s symbolic ownership right in Telecom, and I ask the Minister to address this issue urgently because the Supplementary Order Paper he introduced takes out the Kiwi share obligation from the Act. It was understood that the Kiwi share obligation placed on the privatised Telecom obliged it to maintain service to sparsely populated parts of the country, and that would be transferred to the new Chorus company, which would then continue to operate the existing copper networks as well as the new fibre network, which was supposed to be available to 75 percent of consumers by 2019.

The Kiwi share obligation includes a requirement for local free calling, the ability for all residential users to receive a 111 service, and a requirement that the Government must consent to a purchase of more than 10 percent in Telecom shares and to the purchase of more than 49.9 percent of Telecom shares by overseas interests. All references to that Kiwi share obligation have been removed from the bill in late amendments being tabled in the House.

We have serious concerns that this leaves the way open for full overseas ownership. Does it leave the way open for full overseas ownership of the new strategic infrastructure asset, to be called Chorus2, which would then build and own the broadband fibre network? The Minister needs to address that issue as a matter of urgency. I have had calls today from telecommunications companies who knew nothing about this amendment and do not know what it means, and they have serious concerns that the Kiwi share obligation provisions are being removed from the Act. They do not know anything about it; they have not been consulted. There has been no opportunity for public consultation and discussion about the implications of this issue.

The Kiwi share obligation is part of the fabric of New Zealand’s telecommunications. It is an absolutely critical guarantee to New Zealanders. Why is it being removed from the Act? Where is it going? How can New Zealanders be reassured as to where they will even get their telephone bill from? What organisation will it come from? What guarantees will come from it?

Even if the Kiwi share obligation is maintained within the contractual arrangements with Chorus2, the removal of any mention of it from the Act raises significant issues of the watering down of the telecommunications companies’ obligations to the people of New Zealand. I think it is valid to be asking the Minister today whether free calling will become a thing a past, whether residential telephone services will cease to be at a standard cost, and importantly, whether the new Chorus2 entity will be allowed to be wholly sold offshore.

How can the Minister release a last-minute amendment on such an important issue to Kiwis without a proper consultation process with the industry and the public? Why have I been receiving calls on this issue today from telecommunications companies that have no idea what it means and what the implications are? The Minister must urgently clarify whether the Kiwi share will stay, whether Chorus2 will be obligated to provide it, and whether the Crown will prevent a full foreign sale of the infrastructure business.

Hon TREVOR MALLARD (Labour—Hutt South) : I am somewhat surprised to get to my feet relatively quickly. While the Minister in the chair, the Minister for Communications and Technology, was playing games on his phone, which has been generally ruled out of order by Chairmen, he was asked a relatively serious question that could make quite a lot of difference as to how this legislation goes. It goes to the effect of the changes to the Kiwi share obligation, which is in his Supplementary Order Paper 247. I reinforce the comments that have been made by my colleague Clare Curran. I think a number of members have today been approached by telecommunications companies that are uncertain as to the effect that those changes have. I think it is very important to get clarity around these issues. If they are minor effects, then that is fine. If they mean that the rights that the Crown retained on the sale of Telecom—effectively the Kiwi share rights—are being lost completely, then that should be made clear. If they are being lost for a particular part of what is currently Telecom on separation we should know that.

With no disrespect, the Minister is a relatively new parliamentarian and I think the tradition is that when a serious question is asked by an Opposition spokesperson in the Committee stage, a response is given in order to let the Committee have an informed debate. Clearly there are some issues that are political and there are certainly some very political issues sitting as part of this bill, but there are some matters of fact. Getting that matter of fact sorted I think would be in the interests of the Minister and the Committee. It could have been sorted relatively quickly with a response from the Minister.

I know that the Minister has been somewhat disparaging of my description of broadband, fibre, and the electronic things at the end of fibre. I note a smile from the Hon Maurice Williamson, who we know knows a lot more about this issue than the vast majority of members in the House through his vast experience, both before he became a parliamentarian and since. I have yet to hear a cogent explanation as to the reasons why the Minister made the changes that he did in July last year. I have gone back and looked at the press statement he gave, and I think it is fair to say that no one could tell from reading that press statement the effect of those changes. It has been only as we have looked at subsequent documentation that it has become clear. What effectively happened was that there was a change at the point of separation between what I described as the pipe, the cable, the fibre, which was originally to be the area that was to be separated, and the wholesale level that, if one likes, would have been above the point of separation previously and is now below that point.

Why is this important? In my view, it is absolutely vital because what is happening here is that control is being given to Telecom or Chorus—whatever it is to be called—around the strength of the flow through the pipe. It is simpler for people like me who do not understand this electronic stuff and the way that the internet and fibre work to use a plumbing analogy. We have a pipe through which a flow occurs. The pipe could be built so that the flow could be unconstricted. People could maximise out at very high levels. But what has been given to Telecom or Chorus—whatever the organisation at the base level is to be called—is an ability to turn taps on the pipe to restrict the flow. What effectively is happening is that the telecommunications company, the group that controls the fibre, can control the flow and can decide how much individual users can download and can price differentially on that basis.

One might say that maybe that is fair enough, but this is a State-subsidised pipe and this is State-subsidised fibre. There is no additional cost whatsoever to the telecommunications company for people to use extra flow. So people can download a lot more, and it does not cost the telecommunications company a jot. At the basic level, we have been told—and I thank the Minister or his officials for giving us the information about the average cost of the connection being $2,500—that the pricing structure proposed for Telecom is $37.50 per month as the minimum charge. At $37.50 for something that is a minimal service, because they have turned the tap down, the new company will have a return of 18 percent per annum, risk free—a risk-free return of 18 percent per annum, because the charge is $37.50 a month on a $2,500 total average investment. Those are the figures that officials have given us. If they are wrong, someone should tell us, but those are the figures that have been supplied. We are told that the average fee is expected to be at the $50 level—$50 per month. If it is to be at a $50 per month level, on average, then the actual cost—the average risk-free return on capital—will be 24 percent. I just ask what Minister in his or her right mind subsidises a telecommunications company that will already get a 24 percent risk-free rate of return for its $2,500 average per household investment.

The Minister might smile, but I tell members that he is not smiling as much as Telecom is smiling. He is not smiling as much as Telecom is smiling at this sweetheart arrangement. The feedback I have had from those involved in the industry, including some not very far from Telecom, at all, is about the sorts of regulatory arrangements that he has made in this legislation, in particular in the Supplementary Order Paper to the legislation. I note that the normal practice of putting substantive Supplementary Order Papers to the select committee did not occur, notwithstanding the fact that the decisions were made before the select committee was due to report.

I am told that Telecom would have done this for nothing. It did not need a subsidy. It did not need the $1.5 billion subsidy, because it was going to get a massive return for something that is risk free and guaranteed. Even in the days of Muldoon—and I say the member is growing a resemblance in his behaviour to that former Prime Minister—

Hon Steven Joyce: Heh, heh!

Hon TREVOR MALLARD: The Minister might say “Heh, heh!”, but he is behaving like Muldoon in that he is regulating and, at the same time, subsidising a monopoly. I am very rarely in the Roger Douglas camp in these matters, but I say to the Minister that he has to choose his methods. It is wrong in principle and it is wrong in practice to subsidise a monopoly. It is even more wrong to protect it against the Commerce Commission, which is what he has done. He has said “You lose, we’ll pay.”

Hon STEVEN JOYCE (Minister for Communications and Information Technology) : I am very pleased to rise to take a call on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. It makes possible the Ultra-fast Broadband Initiative and the Rural Broadband Initiative, which are supported by the parties in this Committee that truly believe in innovation and economic development for New Zealand’s future.

I am not even about to start dealing with the conspiracy theories of the previous speaker, but for Ms Curran’s benefit I have a couple of responses in relation to the issues she has raised. I think it is important that those issues be addressed. Both matters were addressed in the Government’s announcement of 24 May. I will deal with them in order.

Firstly, in relation to the Kiwi share obligations for consumers, as the member may be aware, these were superseded by the telecommunications service obligation deed with Telecom, which was negotiated by the previous Government in 2001. Therefore, they are not actually active in the Act at this time. We have been clear all the way through, for quite some time now, that the obligations in that telecommunications service obligation deed—if Telecom should become the successful bidder—would be split between Telecom and Chorus, and a replacement deed would be put in place. That is currently being negotiated, and there are no plans to make any changes to those obligations.

The second issue is the ownership restrictions of the Kiwi share, which is the matter addressed in Supplementary Order Paper 247 in my name. That was the subject of an announcement by me on 24 May 2011, and also the subject of a series of questions and answers released at that time, so that should not come as any surprise. That was the date of the announcement of the arrangements with the successful bidders. That announcement pointed out that the ongoing ownership restrictions would remain for Chorus at that time, and those have not been changed. They will be achieved through a deed between the Crown and Chorus, combined with ordinary shares in Chorus that are held by the Crown, and requirements in the Chorus constitution for unanimous agreement by shareholders for any change. Of course, the Crown will be a shareholder. The Kiwi share obligation, in that respect, is no longer necessary or applicable. For completeness’ sake, I note that those restrictions will not apply to the retail company, in the same way that they do not apply to other retail companies such as Vodafone, TelstraClear, and other retail companies in the market place. That information should address the member’s issues, in that respect.

CLARE CURRAN (Labour—Dunedin South) : Before I get into the other issues we are raising today in relation to the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill and the amendments we are putting up, I again ask the Minister in the chair, the Minister for Communications and Information Technology, for clarification. Although he has clarified the deed that will be undertaken between Chorus2 and the Crown on the ownership issues, I ask that he specifically address where the requirements will be placed for the other important parts of the Kiwi share obligation to do with the emergency calling services, standard rentals, and the free calling aspect. I ask that he reassure the public that taking that obligation out of the Telecommunications Act will not water it down.

Labour has today introduced a number of other amendments to this bill and to Supplementary Order Paper 247. We hope they will go some way to addressing the deep flaws that underpin the legislation, and we seek the support of other parties in the Chamber on these issues. These issues were raised over and over again by submitters during the deeply flawed process that the Finance and Expenditure Committee undertook. It was a truncated process that gave submitters a very short amount of time to process the extraordinarily enormous amount of information that was being put before them in the original Supplementary Order Paper 204 in relation to the structural separation of Telecom. It meant that their ability to have their case heard and be taken seriously was diminished.

The deal with Telecom that has subsequently been announced—despite the very large Supplementary Order Paper that essentially dealt with the structural separation of Telecom—which is for about 70 percent of homes in the 75 percent coverage area, is conditional on the passage of this bill and Telecom shareholder approval. The two major issues that remain now that the regulatory holiday issue has been removed are the structural separation of Telecom retail from Chorus, with those various sharing arrangements, and the reintegration of Telecom wholesale into Chorus. There is still, as yet, no knowledge of where that separation will occur, what the end point will look like for those two entities, and to what extent the new Chorus organisation will have a monopoly and the ability to price gouge down the track. That is one of the major issues that needs to be addressed. We have a number of amendments today that go to the issue of where the separation occurs, the consultation that needs to occur around that process, and whether any operational separation functions should remain between the wholesale part of Telecom and the Chorus entity to ensure that true open access can occur in the future.

The other main issue is around the averaging of the unbundled copper pricing, which will push up the price. As the Minister well knows, we heard a number of submissions on this issue in the select committee, but he just dismissed them out of hand. The price of copper will be pushed up in the urban areas where it is actually used. For people who are listening, that means the broadband we are getting now will go up in price, and you will have to wait until possibly—

The CHAIRPERSON (H V Ross Robertson): No, I will not have to wait.

CLARE CURRAN: The people who are listening—

Amy Adams: I raise a point of order, Mr Chairperson. I have been listening for some time for the member to get to Part 1, which deals with the telecommunications service obligations. She has spoken at some length about structural separation and the Crown’s investment structure, none of which are included in Part 1. I ask that she be brought back to Part 1, which is what we are debating.

Hon Trevor Mallard: I was listening very carefully and the member was speaking on exactly that and on the Kiwi share, which goes right to that question.

The CHAIRPERSON (H V Ross Robertson): Can the member just continue.

CLARE CURRAN: Thank you, Mr Chairperson. I apologise for bringing you into the debate.

The point I was making is that the people of New Zealand who are receiving broadband services now will find that their existing copper services go up in price while they are waiting for fibre. Many people will not receive that fibre in their homes until possibly 2019, and there is no guarantee that they will get it even then. The big con that lies at the heart of this bill is that for the vast majority of New Zealanders there is no guarantee as to when they will get fibre, and in the meantime their costs can go up.

The point in relation to Part 1 and the issues that surround the Kiwi share provision is that a vast number of questions still lie behind this bill. There has been an enormous lack of consultation with the public and no explanation of many of these issues. How can the Minister introduce such an important component, removing all reference to the Kiwi share, into the Supplementary Order Paper at the very last minute and not provide the opportunity for public discussion about it, or for public submissions on the issue so that the public can be reassured that those important obligations will be maintained?

A number of other issues will be contained in our amendments today. They go to the contractual arrangement with Telecom that replaces the regulatory forbearance period, and the enormous potential risk that that arrangement places on the Crown. Again, this amendment was introduced after the bill came back to the House. There was no public consultation, no ability for submissions on it, and no ability for analysis of it. The Minister himself has acknowledged publicly, and certainly in the select committee and in this Chamber, that no analysis was done on it. It was just: “Trust me, I know what I’m doing.”, which is what he says to all criticism of him.

We have another amendment on the liability on breaches of the bill—

The CHAIRPERSON (H V Ross Robertson): Part 1.

CLARE CURRAN: —which, as members will see, we will be discussing.

I would be keen for the Minister to provide the public of New Zealand with more reassurance on those important issues of Kiwi share. It is extremely important that the issues of consultation to do with the structural separation of Telecom be addressed, along with the role of the Commerce Commission, the arrangements for how the Commerce Commission will be able to intervene if necessary on pricing and other matters, the arrangements for the split between Chorus and Telecom retail, and how the integration of Telecom wholesale and Chorus will work in the short term.

There are a number of other issues, as the Minister well knows, on the equivalence of inputs and essential issues on open access and whether there will truly be competition at the retail level in order to provide the people of New Zealand with a truly competitive and affordable broadband service. Then there is the vexed issue of affordability, what will happen to the copper prices in the meantime, and when the people of New Zealand will be able to receive fibre broadband in their homes. That fibre broadband was promised to them by National and by the now Prime Minister before the last election. It was his No. 2 pledge, which was an undeliverable promise, given the amount of money that was attached to it. This Government and this Minister have tried to—

Hon DAVID PARKER (Labour) : I want to inquire of the Minister in the chair, the Minister for Communications and Information Technology, for an explanation as to why we are, without any select committee involvement and with less than a day’s notice to members of Parliament, being asked to remove the Kiwi share obligation for Telecom.

For just about everyone in New Zealand, in our homes and businesses, the three most important utilities are water, electricity, and, increasingly in society, telecommunications. Any legislation that impacts substantially on one of those utilities ought to have the benefit of full scrutiny by members of the public, by industry participants who are affected by it, by consumer groups, and by industries that are affected by it. I am very disappointed that yet again we have the Government deciding that it knows best. Without recourse to the normal protections that we have in New Zealand, we are by a Supplementary Order Paper in the Committee stage of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill—without any prior notice to political parties or the industry—having fundamental changes being made to, in this case, our telecommunications laws relating to the Kiwi share obligation.

We do not know what the detailed implications are of that for our country. We are kept ignorant of that fact by the poor process that the Minister has run, and this is indicative of what is now common practice not just from this Minister—although most commonly from this Minister—but also from other Ministers in the National Government who abuse the processes of this Parliament.

This country is rare in Western democracies in that we only have a unicameral Parliament. We have one House. We do not have an Upper House to provide protections against mistakes that are made in this House. We further have the entrenchment of power in New Zealand because we do not have state Governments, like most larger countries have, which take responsibility for significant parts of the governance of their countries, whether they are the United States or Australia. Bigger countries have state Governments, as well as Parliaments that normally have more than one level. In New Zealand we are totally reliant on this one Parliament, this one House of Representatives. As a consequence, we in New Zealand have built into our constitutional protections select committee procedures. Those select committee procedures are very important so that we can tease out the consequences of important changes made by legislation. That is why it is unusual for this Parliament to be considering a change of this significance being made by Supplementary Order Paper in the Committee.

We in the Labour Party were contacted today by some of the major telecommunication players in New Zealand, other than Telecom. They said: “Hey, were you guys aware that this document that’s just been dropped in Parliament includes changes to the Kiwi share obligation?”. Well, until they told me, I was not aware of that. It is not central to my responsibilities. I do not have every minute of the day to drop into the Bills Office and check every half hour as to whether another dirty trick is being played by the Minister outside of normal processes. I did not learn about this until I was sitting in a select committee this morning on estimates hearings. I was tied up until 1 o’clock this afternoon there and, indeed, for most of the time between 1 o’clock and 2 o’clock I was preparing for question time because I had questions. I am not the most expert in this area; I readily acknowledge that. People like David Cunliffe and Clare Curran in my party are more expert. What part can David Cunliffe play in this debate today? None, because on this occasion he is away on leave at a prearranged appointment. So we on this side of the Chamber cannot properly inquire into the effects of the removal of the Kiwi share obligation. That is not good enough. I want to know from the Minister why he thinks he is justified in making this change. I want to hear from him in detail the implications of this change. The explanatory note of Supplementary Order Paper 247 deals with it in two sentences: “The main effects of this Supplementary Order Paper”—and it lists some other things, but I am dealing only with the Kiwi share applications—“are that it makes changes to provisions relating to deemed TSO instruments and removes references to the KSO (Kiwi share obligation) … These amendments are to reflect that the KSO will not be operative following the structural separation of Telecom:”. Does that tell us what the effect of the change will be in practice? Does it tell us what the effect of the Kiwi share obligation is now but will not be after this legislation is passed? Does it tell us the implication for consumers, whether they are residential consumers, businesses, or competitors of Telecom? It does not tell us about the implications. For example, does the Kiwi share obligation include any obligation on the dominant organisation, Telecom, to treat its competitors fairly, or do we find all of those provisions in the Commerce Act? I do not know the answer to that. It is a fair question for me to ask.

The Minister for Communications and Information Technology shakes his head. I do not know whether he will tell us, but I would like not just the benefit of the Minister’s advice but also the benefit of advice from competitors in the industry on whether the Minister is being fulsome in his explanations or whether the Minister might be making a mistake. The Minister might have the best intentions in the world, but Ministers make mistakes. We see that often. Indeed, these very changes that have been made to this legislation late in the piece are perhaps reflective of the fact that he has made mistakes earlier in this process. So why should we in this Parliament trust that other mistakes are not being made?

Mr Finlayson, the Attorney-General in the Government, got on his high horse and criticised prior Governments for poor process in making legislation. Legislation made in haste too often leads to consequences that have not been properly thought through by this Parliament. Given that this infrastructure area is one of the most important areas of infrastructure that we need in New Zealand not just for businesses but also for individuals—rural farming customers and residential people in towns and cities—I would have thought that we should be properly considering the effect of abolishing the Kiwi share obligation. We should remember that the Kiwi share obligation was seen as a really important and fundamental part of the protection for consumers and for New Zealanders that we were to have following Telecom being privatised some time ago. It has been a fundamental part of the protection of consumer interest since that time, and here we are at this late stage in the process with a one sentence explanation in this bill that the Government is abolishing it.

I would like a detailed explanation from the Minister as to the effect of that abolition. I am absolutely aghast that members of Parliament have not been provided with any report on the effect of the change. We have not had the opportunity to ask departmental officials for advice, as we would have done through a select committee. We have not had the opportunity to hear from submitters. We have not had the opportunity to go to the Parliamentary Library and research questions that we want to ask. We have had a mere matter of hours to come to terms with it.

We are completely reliant upon the disclosures that are made by the Government as a consequence of the poor process that is being followed. It makes me very uncomfortable, and I think that, given that we are a unicameral institution with no other checks and balances on the way in which we conduct ourselves in this Parliament, critics outside of this place would be rightly concerned that this is poor, poor process and that by the time the voting on this legislation is called upon, we will not have been able to get to the bottom of it.

We will be voting against this bill, because we do not know the effects of it. The Minister may not even properly understand the effects of it, and we have not had the opportunity at a select committee to assess the true position.

AMY ADAMS (National—Selwyn) : I will start off my contribution in this Committee stage of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill by acknowledging and congratulating the Minister for Communications and Information Technology on the work he has done in putting together a package that will see New Zealanders get access to world-leading ultra-fast broadband. It will see 75 percent of New Zealanders get access to high-speed broadband, it will see the vast bulk of the rest of New Zealand get access under the Rural Broadband Initiative rollout, and it will make us one of the most connected countries in the world. That can only be good for economic growth, jobs, incomes, and lifting the living standards of all New Zealanders.

I find it amazing that the Labour Opposition will vote against putting ultra-fast broadband into the homes of New Zealanders. What has been interesting to me is that throughout this process the Labour Opposition has been looking for monsters under the bed. Labour has been looking for reasons to have a go at this bill, because it knows that the bill is a successful initiative of this National-led Government, and it wants to do what it can to have a go at it.

Part 1 of the bill is about the telecommunications service obligation instruments and the new telecommunications development levy, the way in which that is set up, and the way in which it is funded. We are again continuing to hear from Labour members today desperate attempts to try to create issues where there are none, because they cannot accept the fact that a National-led Government is delivering to this country the sort of economic growth and infrastructure that will allow for jobs, incomes, and living standards all to be raised. I think it is worth getting on record that this bill is a fundamental part of the economic growth plan for New Zealand, and Minister Joyce should be congratulated on it.

This first part, as I said, really talks to the way in which the telecommunications service obligations are set up and the way in which they are costed. It is a technical part of the law. As part of the Finance and Expenditure Committee, which reviewed the bill, I say that it certainly takes a while to properly understand some of these aspects, particularly if one has not been overly involved with the telecommunications sector, as was the situation for me. But the changes we are making to the way those service obligations, and the service agreements under them, are carried out—the way the compensation is costed and the way it is funded—are, I think, very sensible when one sits back and look at them. They ensure that the providers of those otherwise uneconomic telecommunication services are properly compensated but are not overcompensated.

An important part of this is looking at the way the calculation is done to ensure that the net cost to those providers is the relevant cost, because financial benefits would accrue from the provision of those services. Without the passage of this legislation, there is a very real likelihood that telecommunications providers could in fact be overcompensated, which obviously is something that we want to avoid. Part 1 is in large part focused on tidying up the way that those service obligations are administered, on the way that compensation is calculated, and, as I said, on setting up the telecommunications development levy to ensure that that compensation can be paid for, as well as paying for the provision of various telecommunications infrastructure.

The other point that I will touch on is the changes that have been made in relation to the liable revenue that that is assessed on. I think it is an important part in terms of ensuring that when the telecommunications development levy is being applied, we look carefully at companies and ensure that we are catching only those large providers that gain a significant part of their revenue from the provision of telecommunication services.

I think that the work the select committee did and the further refinements from the Minister for Communications and Information Technology in Supplementary Order Paper 247 are very sensible and pragmatic. They will result in an industry that has a far clearer, more streamlined, and ultimately more sensible way of assessing, monitoring, administering, and funding those particular obligations. They are important obligations, because they are the basis on which New Zealanders can be assured that they will have those fundamental telecommunications services provided without discrimination based on the part of the country that they live in. As I have said in previous contributions on this bill, it is very important to me, coming from a large rural electorate, to ensure that our rural communities are looked after. That has always been a key priority for this Government. We do stand up for our rural communities, unlike the Labour Opposition. We do ensure that rural communities have access to the same standard of infrastructure that their urban cousins enjoy. That is why I have been a very proud and ardent supporter of the Rural Broadband Initiative, which we will certainly discuss in more detail as we progress through this bill.

STUART NASH (Labour) : I would just like to correct something the previous speaker, Amy Adams, mentioned. She said that the National Government stands up for rural communities. Well, I have a major concern, because in the rural community in the Napier electorate, which I deal with, not one single school will get ultra-fast broadband. No school will get ultra-fast broadband. The problem with that—this comes under the Kiwi share obligation—is that what will happen there is just another hollowing out of provincial New Zealand. These schools are going to get nothing.

National says it is the party of the farmers. Well, that is the biggest load of cobblers we could ever get. I can tell members that there are a number—[Interruption]

The CHAIRPERSON (H V Ross Robertson): Running commentaries are out of order. I refer members to Speakers’ rulings 61/5. Members can have a speech shortly.

STUART NASH: There is great concern when the member stands up and says that 75 percent of New Zealanders will get ultra-fast broadband. I ask how many of those New Zealanders live in the large metropolitan areas and how many of them live in places like Wairoa, which will get nothing, according to a document put out by the Minister for Communications and Information Technology.

I will talk about the Kiwi share obligation. The Kiwi share obligation was set up in 1990 in recognition that we live in a country that is quite long and narrow and where there are not many people. The Kiwi share obligation was set up to ensure that no New Zealander would miss out and that a purely market-driven, market-led monopoly or organisation could not come in and do away with the rights of New Zealanders who live in remote or rural areas that may have been seen as uneconomic by a purely overseas market-driven organisation and therefore were where the service was going to fall down. The Kiwi share obligation was put in specifically to protect the rights of ordinary New Zealanders, of everyday New Zealanders, of New Zealanders who choose not to live in places like Auckland or Wellington but in rural areas like Wairoa.

What does it say when the Minister yet again whacks a Supplementary Order Paper on the Table on the day the bill is being read? Supplementary Order Paper 247 wipes out one of the major instruments that give New Zealanders security around telecommunications. Well, I will tell members what it says. I can tell members and tell the country what it says. It says that Mr Joyce really does not care about a whole lot of New Zealanders living outside Auckland. Mr Joyce must have known he wanted to do this. I am sure he did not go to bed on Monday night and think “Oh, goodness me, the Kiwi share obligation! Oh hell! I had better do something about this, because what we are doing here is protecting the rights of New Zealanders. We had better get rid of it.”, come in on Tuesday, write this Supplementary Order Paper, and whack it down on the Table. Mr Joyce is a smarter man than that. He is a lot more cunning than that. The Minister always knew he was going to do this. He always knew he was going to do this.

I have sat on the Finance and Expenditure Committee. What has happened with this bill is that the original bill was tabled and it went through the select committee process. We called for submissions, as we do with bills, and they came in. Then, lo and behold, another Supplementary Order Paper, which was as large as the main bill—

Clare Curran: Bigger.

STUART NASH: —bigger than the main bill, was suddenly whacked on the Table. Oh goodness me! We did not have enough time to go out to the industry and use proper process to call for submissions. We asked, and David Cunliffe and Clare Curran asked, for an extension, because this is pretty important.

Amy Adams: It was granted.

STUART NASH: It was granted for 2 weeks; we wanted 6 weeks because this is significant legislation. The extension was granted for 2 weeks, and I think the only reason Government members did that was that they knew that the serious players certainly would not have the time to go out, consult, and put a decent submission together.

There was a breakdown in process, but this Supplementary Order Paper is worse. Mr Joyce knew he was going to take out the Kiwi share obligation when the legislation was first introduced. If he did not know then, he certainly knew with the first Supplementary Order Paper, Supplementary Order Paper 204. The only conclusion I can reach is that the tabling today of Supplementary Order Paper 247, which gets rids of the Kiwi share obligation, was a cunning plan to make sure that it went below the radar and that New Zealanders had no opportunity to debate it in the public forum.

Mr Joyce knows that if he had put something out about the removal of the Kiwi share option, there would have been many submissions from all around New Zealand, including Wairoa, and it would not have gone through. Enormous concern is being expressed today to Clare Curran, Labour’s spokesperson on communications, and also to David Parker and to other members of the Finance and Expenditure Committee. This Supplementary Order Paper is seen as being rushed through. It is almost like we are under urgency. This is urgency when it is not urgency. This is urgency when it is not urgency, because essentially there is no opportunity for New Zealanders to debate the removal of the Kiwi share obligation, as put down in the Supplementary Order Paper. That is not good enough.

I know what will happen. As we have seen, Mr Joyce has taken on a powerful industry. I think he has underestimated the power and resolve of the telecommunications industry. I suspect that he will see a massive public relations plan against this whole thing. He has opened up a can of worms. It is not only the telecommunications industry that he has rattled but also the people of New Zealand. No one liked the sale of Telecom, but the Kiwi share was there and it protected people’s rights. Roger Douglas took it only so far, but he knew he could not get away with screwing the people like this. So when Amy Adams says she stands up for rural communities, all I can say is that I would love to call a public meeting in Wairoa and take that member up there so she can stand up and tell the people of Wairoa that the removal of the Kiwi share obligation will look after rural New Zealand. Those people are not stupid.

Mr Joyce has played into the hands of the media. I bet the press are writing about this at the moment. They are not in the press gallery; they will be in their offices saying that he has handed them this story and asking what he was thinking. It is just like when Don Brash came in. He is a smart man, but he does not quite have the political smarts. I am surprised that a man of Mr Joyce’s intelligence has come into the Chamber and dumped this Supplementary Order Paper on the Table. He must have known that the removal of the Kiwi share obligation was not going to sneak through under the radar and that people would report on it. This was always going to be a huge issue. I am not too sure whether it is arrogance or whether he just miscalculated. I am not too sure what it is.

I would also like to talk about an amendment to Supplementary Order Paper 247 that Clare Curran has tabled.

Hon Member: Who?

STUART NASH: Clare Curran, Labour’s spokesperson on communications. She has suggested adding a new clause 6A to make sure that Telecom does not have unbridled monopoly power that it can abuse. I would like to think that Telecom would never abuse monopoly power, but history suggests that perhaps it has a slightly dodgy track record in that regard. Clare Curran’s amendment is “To substitute the following subsection for new subsection (2A): To avoid doubt,”—is that not what Parliament is here for, to avoid doubt and provide clarity—“in determining whether or not, or the extent to which, competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand is promoted, consideration should have regard to (a) the benefits of competition to the end user;”—that is nice, is it not; I would have thought that every party would give consideration to the benefits of competition with the end-user—“and (b) the benefits of efficient investment.” Clare Curran’s amendment also omits from Supplementary Order Paper 247 the heading “Discontinuance of accounting separation” and new clauses 23GDC to 23GDF.

This comes across as a very common-sense amendment. It is not a political amendment; it is common sense. I think the Minister in the chair, the Minister for Communications and Information Technology, has probably looked at it and thought—like he did with the Kiwi share obligation on Monday night—that it makes sense and that he will allow it to go through because, after all, we are all for competition for New Zealanders and we all want that element of doubt removed. Thank you very much.

TODD McCLAY (National—Rotorua) : I move, That the question be now put.

GARETH HUGHES (Green) : Kia ora, Mr Chairperson. Ngā mihi nui ki a koutou. Kia ora. I am going to take a quick call on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. I want to put into Hansard the absolutely shocking and poor process this legislation has been through in this Chamber. The Minister has a name as the “Colossus of Roads” wearing his Ministry of Transport hat. Now, as Minister for Communications and Information Technology, he clearly has a name for himself as the “Minister of Poor Process”. This bill is being rushed through under a secret drafting process. We saw Supplementary Order Paper 204 slammed on the Table. The Supplementary Order Paper the size of a normal piece of legislation was slammed on the Table, with only a limited time given to the public to have their say. Now, we are seeing the same occur. The Minister has slammed another Supplementary Order Paper, Supplementary Order Paper 247, on the Table. I missed it originally when I went to the Table, because I thought it was a bill on the Table. But, no, in fact, it is the Minister’s Supplementary Order Paper 247.

Supplementary Order Paper 247 does some pretty large things. I do not think anyone out in the public or in the telecommunications sector, except maybe Telecom, was aware of the big changes happening in the Kiwi share obligation. My question to the Minister in the chair, the Minister for Communications and Information Technology, is that if the Minister is going to ensure the protections around Kiwi ownership and the protections around Kiwi telecommunication customers through the deed with Chorus, why does that not exist in the legislation? Why is the Minister watering down these protections? The second question for the Minister is how many times he has been meeting with Telecom directly to discuss this issue. If we had a lobbying bill in Parliament, like the one the member Sue Kedgley has, we might know the answer to some of these questions. How many times was the Minister asked directly by Telecom to get this provision?

The Kiwi share obligation protects Kiwi ownership of Telecom and protects Kiwi customers. We are seeing the Minister protect Telecom instead. Through this bill more than $900 million of the $1.35 billion for the Government’s Ultra-fast Broadband Initiative will be going to Telecom, and will be going offshore in terms of profits. We saw the same thing with the regulatory forbearance. Members on the Finance and Expenditure Committee argued during deliberations to keep the regulatory forbearance; they argued for it passionately against the special access undertakings. My question for them is why they are now happy. Again through a poor process, 2 days after the Finance and Expenditure Committee’s report was tabled in this House, the Minister totally got rid of the regulatory forbearance, the regulatory holiday. Why are those members, who were such active advocates for regulatory forbearance in the select committee, now quite prepared to see all that work literally wiped away? The Minister has, through another poor process, got rid of that forbearance period because of the work of the Māori Party and the last-minute stitch-up.

We have gone from what was essentially a Wild West environment. The Government would not put in enough money to achieve its coverage ambitions of 75 percent, so it decided to set up a Wild West environment whereby there would be no regulation or laws to foster civilisation out in the Wild West, if we take that analogy. Now, essentially, the Government has still set up the Wild West, but it is offering to underwrite all the costs and all the risks of the private companies trying to develop themselves in that Wild West environment. So my question for the Minister is simply, like the question asked of Dr Mapp in the House today, how much money he asked Cabinet for, given that this was the second priority on the table for the Government at the election. Did the Minister ask for more than $1.35 billion; if so, what was the figure? It should be an easy question to answer.

Essentially, the “Minister of Poor Process” continues that poor process. There is no analysis of the major changes in Supplementary Order Paper 247; there is no public input. The Minister just stands there and tells us to trust him, trust the negotiations at Crown Fibre Holdings, and trust the contracts. Quite frankly, I do not trust the Minister, at all.

LOUISA WALL (Labour) : It has been very interesting listening to the debate on the Telecommunications (TSO, Broadband, and Other Matters) Bill this afternoon. I am not on the Finance and Expenditure Committee, and I have not been in the House very long. But I reiterate what the honourable member from the Greens Gareth Hughes has just said: this is, in fact, incredibly poor process. Supplementary Order Paper 247 was tabled only on Tuesday, 14 June, and we have had access to this paper only today. Already there have been several calls to not only Clare Curran, our spokesperson, but also a number of other Labour Party members. We want to point out the significance of removing the share obligation. It is a big deal; it is not a little thing. It should not have been put in a Supplementary Order Paper. In fact, it is one of the primary debating points for changes in this area. I think the Minister in the chair, the Minister for Communications and Information Technology, has to explain why he has done that. I think it is really important that New Zealanders now know that they will not have universal coverage, and that having equity in access to telecommunications in our country has now been deleted, or will be deleted if this bill is passed.

Carmel Sepuloni: Who will miss out?

LOUISA WALL: Exactly. I want to know which Kiwis will miss out on having access to telecommunications if this bill goes through and if the Kiwi share obligation is removed. Who will be the main ones affected by not having access to what we have all regarded as a public good for all of us? I would like the Minister to explain that.

We are on Part 1, “Telecommunications service obligations and general matters”, but in terms of that poor process, I will go back right to the beginning of how the industry has been engaged in having a say. It was quite interesting. I noted Vodafone’s submission. This is a quote from their submission: “We are not alone in thinking that the Committee would have benefited from allowing more time for consultation and submissions … Making such major change at such speed risks bad decision-making, since policy-makers have only a partial understanding of the implications of the changes they are making.” Hopefully the Minister can answer the last question I asked: who is most affected by removing the Kiwi share obligation? Given that we do not fully know, I will be very interested in what he has to say. I have another question for him: if this is such major legislation, and if we think telecommunications are so vital for our economy, why were the chief executive officers of TelstraClear, Vodafone, 2degrees, InternetNZ, and Kordia given only 10 minutes each to discuss this very important legislation?

Why have we dumbed down democracy? Why are we rushing through this major legislation without consultation, and without input from the people who provide that service to New Zealanders? Being able to communicate with one another is vital. It is vital for us as human beings to be able to keep in contact with our families, but also it is vital for businesses and for how societies function in a modern economy. If it is so important, why has the Minister allocated only 10 minutes to each of these major telecommunications company bosses to have a say on major legislation that will have far-reaching consequences? I would be very interested in the Minister answering that question, given that there seems to have been limited consultation before the select committee process. That is vital. I look forward to the Minister answering that question.

Labour absolutely opposes this bill, and we oppose it because we think it will create unforeseen consequences in terms of who has access to telecommunications in our country in the future. We will not let rural communities—

Carmel Sepuloni: Like Wairoa

LOUISA WALL: —like Wairoa miss out on access to this vital technology. I want to know whether the Minister has information about which communities will be affected. It would be really good if the Minister took a call and answered some of those questions. I think that is me. Kia ora.

Hon CRAIG FOSS (Minister of Civil Defence) : I seek leave to table a couple of tweets from submitters to the Finance and Expenditure Committee, including one who is now a Labour candidate for the next election, which say that the process of submissions was run very well and that the time allocated exceeded the 10 minutes that was publicised.

The CHAIRPERSON (Lindsay Tisch): Submissions are in the public domain; I will not accept that.

Hon RICK BARKER (Labour) : I will pick up a couple of points on Part 1—in particular, I will raise with the Minister in the chair, the Minister for Communications and Information Technology, the very serious constitutional issue raised by the Hon David Parker. I think that very often we take these matters lightly, particularly people who hold a ministerial warrant and are busy people who want to get things done. I understand that the Minister in the chair wants to get things done, but there are constitutional processes in place to ensure that the public are not subject to a legislative and parliamentary bushwhack. I fear that that is what is being imposed upon the public here today. It is clear that Supplementary Order Paper 247 has a significant amendment in it. It is a significant amendment that has not gone to the Finance and Expenditure Committee. There has been no opportunity for the public to get involved. I think that the Minister has a duty and an obligation—a debt—to the public of New Zealand to explain why he has chosen to circumvent the select committee process.

The Minister also has an obligation to explain clearly to the public what the consequences of this amendment will be, and to explain clearly to the public why it was impossible for him to go to the select committee and allow this Supplementary Order Paper to have transparency, scrutiny, and submissions. One of the fundamentals of our parliamentary representative democracy is transparency. Others are accountability and the ability of the public to participate in these debates. But all of those principles have been offended by the process that National has embarked upon here. That is significant. If there were urgent public reasons for this process, there would be no problem. Everybody agrees that the process has to be flexible to enable things to happen quickly, but on those occasions the Minister in the chair explains the reasons for it and the justification for taking that speedy process. However, on this occasion we have not heard that.

The other worry the public should have is that the Kiwi share obligation was put in there for good reason. It was to protect the public against the predations of a monopolistic Telecom. The Kiwi share was an obligation and a burden upon Telecom, one that it has jibbed against, shrugged against, and done everything it could to get it off its back. Why was it a burden? It was a burden because it was a protection for ordinary New Zealanders. Now we are seeing that protection taken away. So one person’s burden will be another person’s benefit. If Telecom is getting rid of a burden, we have to ask ourselves the question of what the benefits to be forgone are.

I would have expected that a responsible Minister who was supportive of transparent and open democratic processes, and who was supportive of transparency, would clearly explain to this Parliament the reasons for this. The Minister would have got up and said “This is imperative because—”. The Minister would also have got up and said “The consequences of this are going to be a, b, c, d, e, f, and g”—whatever it was—and explained that to the public. Instead, in this Supplementary Order Paper we have a small explanation in the explanatory note at the back: “These amendments are to reflect that the KSO will not be operative following the structural separation of Telecom:”. Well, I have to say to this Committee that it would take a very, very knowledgeable person to figure that out. It would take someone who had an incredible amount of industry knowledge to understand the implications of that.

In my view, the Minister has a responsibility to explain to this Committee what he is doing. The Minister gets his power as a Minister from this Parliament, and he is accountable to this Parliament. I say to the Minister that he is in dereliction of his duties as a Minister and as a representative of the people of New Zealand. He has failed to explain to them the consequences of these amendments. There are many people whose phone lines are supported by the Kiwi share obligation. They do not know it and they do not appreciate it; they just pick up their phones. But that is how it should be. They should be able to believe that Parliament will look after their interests. On this particular occasion, their interests are being jeopardised and Parliament has not heard the reasons for that. I say to the Minister that he is adding to New Zealand’s reputation as being the Wild West of legislatures.

CHRIS HIPKINS (Labour—Rimutaka) : I am happy to take a call on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, although I am disappointed that the Minister in the chair, the Minister for Communications and Information Technology, has not yet taken the opportunity to stand up and allay the concerns being raised by members on this side of the Chamber.

Hon Members: Yes, he has.

Hon Trevor Mallard: No, he did not allay them, at all.

CHRIS HIPKINS: He did not allay them, at all. I am not an expert on telecommunications issues, but I do know that the people living in my electorate and those in electorates around the country value having their free local calls. They value the transparency that exists in that arrangement at the moment, because it is a legislative provision under the Kiwi share obligation that means that they know that—

Clare Curran: In the Act.

CHRIS HIPKINS: —in the Act—they will be able to ring their next-door neighbours. The little old ladies up the street know that if they pick up the phone to ring their next-door neighbours to make sure they are all right, or to arrange to have a cup of tea, they will not be charged, because under the current law a charge is prohibited; they are guaranteed their free local calls. That was something the Government put in place at the time when Telecom was sold, because New Zealanders were concerned that the privatisation of Telecom would result in their paying more. One of the things the Government of the day did—

Hon Maurice Williamson: Who sold Telecom?

CHRIS HIPKINS: —when it wrongly sold Telecom, I have to say, was to put in place a guarantee that New Zealanders would have their free local calls. Supplementary Order Paper 247 has now been slipped in by the “Dark Prince” of the National Government; it has been slipped on to the Order Paper this afternoon by Steven Joyce, and it reflects the fact that the Kiwi share obligation will no longer be operative following the structural separation of Telecom. What does that mean for ordinary New Zealanders who have not followed this debate? It means that legislation will no longer protect their free local calls. They will no longer have the protection they have come to count on.

I want to hear from Steven Joyce about how he is going to guarantee that New Zealanders continue to have free local calls—or is that out of the window? Are they going to lose their free local calls? It could be a very brief description from the Minister. He does not need to take a huge amount of time. I want him just to stand up and say whether free local calls will continue to exist under the National Government, and if they will, how he will ensure that. Will it be a contractual obligation? If so, what surety will New Zealanders have that the contract will not be renegotiated in the future and they will lose their free local calls? Will it be inserted into the legislation somewhere else? If so, where is the Supplementary Order Paper that is going to do that? If the Kiwi share obligation is now dead and buried, and this Supplementary Order Paper suggests that it is, how will he ensure that New Zealanders who rely on the Kiwi share obligation, even though they probably do not understand what it is—they probably do not care either; they just want to know that when they pick up the phone to make their local calls it is free, or that when they are in an area that is covered—

Hon Craig Foss: Does the member use Skype?

CHRIS HIPKINS: Skype is fantastic technology, and if the Government ever gets around to delivering the broadband it promised New Zealanders at the last election, then more people would be able to use it, but given the dismal failure rate it has had so far in delivering on its broadband promises, I will not hold my breath. I have to say my broadband is provided by Telecom, and it is absolutely hopeless; it was much better when it was provided by Telstra. But that is a whole other part of the debate, and I look forward to contributing to that later on.

What I, the people in my electorate, and those in other electorates around the country do want to hear is an assurance from this Government that their local calls are still going to be free. What about people in those areas who may not have the services they have come to rely upon any more, if the Kiwi share obligation is dead and buried, as Steven Joyce seems to think it is? Where is the surety for them? I would like to see that Minister stand up in the Chamber and give a clear explanation to those people. This is significant. It is very important for people to know.

The provision of free local calls is one of the things we really value in New Zealand. People in my electorate really value it, and people around the country really value it. There are a huge number of reasons why it should not be taken away. There are reasons to do with social isolation. I am particularly concerned about older citizens who live around the country who rely on free local calls so that they can keep in contact with the rest of the world, with their families, and with their neighbours. If that is taken away there is a safety element to that. Steven Joyce may well have a great explanation that guarantees that free local calls will continue. It is not clear from this Supplementary Order Paper, and it is not clear from what he has said so far. He is shaking his head, which makes me think free local calls are dead and buried under the National Government, and I think that is absolutely disgraceful.

CHRIS TREMAIN (Senior Whip—National) : I move, That the question be now put.

GARETH HUGHES (Green) : I will take just a very quick call on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. In the hour I have been in this Chamber, in the very short time that I have been aware that the Kiwi share obligation will be removed from legislation, I have been tweeting and googling online. The Kiwi share has been protected in legislation since 1990, and the only way it can be amended is by Act of Parliament, with the Royal assent required down the line. My question to the Minister in the chair, the Minister for Communications and Information Technology asks what protection the Kiwi share will have in the future. We now know, thanks to the Ministry of Economic Development’s questions and answers recently posted online, that there will be the current Kiwi share obligation on retail Telecom, and Chorus2 will still have the ownership provisions.

Why does the Minister not take a call to explain exactly how this will work? I would like particularly to know how the Kiwi share obligation can be changed through the deed—through the contract signed by the Minister—with Chorus2. What is the process for this to be changed? I imagine it is considerably easier than taking it back to Parliament and getting Royal assent. Can the Minister explain exactly what those changes will be? We know that the Kiwi share has been a vital part of the telecommunications sector in New Zealand, and a vital part of protecting Kiwis’ access to telecommunications and Kiwi ownership of vital infrastructure.

It is good that, apparently, we will still see the 49.9 percent rule applied to Chorus2. Why did the Minister not take this provision to the Finance and Expenditure Committee, to the public, and to the industry? Why has it come in only now through Supplementary Order Paper 247, at the last minute? Can the Minister explain that question, because I think the public of New Zealand, quite clearly, would like to know answers to these very important questions.

They are rightfully concerned about the Minister of Commerce’s power to terminate someone’s internet account. As we know, after the UN special rapporteur’s report, and after New Zealand apparently showed support for that report through its joining with 39 other countries at the UN to endorse the Swedish representative’s speech, New Zealanders are concerned about the Government’s ability to reduce people’s access to information by terminating their internet account for a civil offence. Now they are concerned about their simple access to phone lines, due to the Government’s removal of the Kiwi share obligation through Supplementary Order Paper 247.

STUART NASH (Labour) : I want to concentrate on another issue, but there is one point I would like to bring up. The Hon Craig Foss stood up and called out to Chris Hipkins to ask whether he had heard of Skype and whether he used Skype. I wonder whether this is Mr Foss’ answer to local phone calls not being free. Is Mr Foss indicating that everyone should get on Skype and Skype their next-door neighbour if they want to have a cup of coffee, which is the example that Mr Hipkins put forward? The other thing I would say is that the people and schools that are not going to get ultra-fast broadband will probably not have great Skype. But Mr Foss, or perhaps the Minister in the chair, the Minister for Communications and Information Technology, could answer on behalf of the newest Minister as to whether he is suggesting that the answer to this is that all people go on Skype and that is the only way they will be able to get free local phone calls.

Another thing I would like to talk about is Supplementary Order Paper 247. The explanatory note states: “These amendments are to reflect that the KSO will not be operative following the structural separation of Telecom:”. I am not 100 percent sure what that means. Does that mean it will be turned off and it can be turned on again, or is it going to be done away with completely? I would love to know these things.

It is interesting: I was talking to an old Minister—well, a Minister who was around a long time ago—and we were talking about what went on in the House. I said that the frustrating thing with a lot of these Committee stage debates was that we throw out questions, and most of them are pretty valid questions, but the Minister in the chair does not get up to answer them. It is really frustrating. He shook his head and said: “You know, in the old days if a member threw a question out to the Minister in the chair, the Minister would get up and answer that question.” Every now and again when there is—

Hon Trevor Mallard: Sometimes they didn’t even bother getting up. They would debate back and forth.

STUART NASH: Yes, well every now and again—and this is my first term, of course, so this is all new to me—we will see someone like Peter Dunne sitting in the chair during a debate on a tax bill, and there will be questions thrown at him about the implications of the words written in the legislation. Peter Dunne, for all his faults, stands up and engages. He attempts to answer the questions put forward by members. As Gareth Hughes mentioned, and he is a fellow of the new age—he is using Skype, Google, and Facebook—often what members are doing is only relaying the concerns and questions of constituents who are just as bamboozled by this as we are.

It would be great, not just for us but for the people of New Zealand who are watching this debate and have a vested interest in it because they live in rural areas, if the Minister could stand and provide an explanation as to the implications of the fact that the Kiwi share obligation will not be operative following the structural separation of Telecom. What does that actually mean? As mentioned, if the Supplementary Order Paper had gone through the Finance and Expenditure Committee we would have found that out. We could have come to this Chamber and debated it, in the knowledge that New Zealanders had spoken. But this is not the case. As I mentioned, Mr Joyce is not stupid; there is no doubt about that. So I wonder why this was not put in straight away.

I would like to go to new section 10(1)(b), to be inserted by clause 5, which states: “the Telecommunications Commissioner must report to the Minister about every proposed alteration to Schedule 1 …”. I turn to schedule 1, and I know we are not allowed to use the “h” word, but this is where there is a dichotomy or a sense of confusion in terms of the processes we are going through at the moment and what is allowed to happen. Part 2 of schedule 1 talks about the appointment of a consumer complaints system. This bill is incredibly tightly drafted, and the reason is that it came under minute scrutiny. Anyone on the Finance and Expenditure Committee will know that it came under intense scrutiny—every word.

What we are talking about here is the appointment of a consumer complaints system. New section 156UA states: “The Minister may, by notice in the Gazette,—”. Why is it that the Minister “may”? Why is it not that the Minister “must”? “The Minister may, by notice in the Gazette,—(a) appoint a system to be a consumer complaints system under this Part (with or without conditions) for a term specified by the Minister;”—it is all about the Minister here—“and (b) set rules for the system; and (c) set rules about the funding of the system.” I would love to see that section saying the Minister “must”. We are talking about New Zealanders and we are talking about a very important part of local infrastructure, so it would be great to see the Minister change that section to say that the Minister “must”. New section 156X(1), under the title “Objectives of a consumer complaints system”, states “When considering appointing a system under this Part, the Minister must have regard …”—well, he must if he decides that “may” was going to work—

TODD McCLAY (National—Rotorua) : I move, That the question be now put.

Hon TREVOR MALLARD (Labour—Hutt South) : I would like to take the Minister to some of the detail of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill and focus in particular on the sections that are near the end of Part 1. I refer first of all to the financial penalties. I ask the Minister for Communications and Information Technology why he has struck a $10 million penalty for the section 69L breaches—that is, the failure to comply with or amend sharing arrangements.

Telecom, as we know—and we are assuming that Telecom and Chorus will continue their behaviour—has, I think, on 19 separate occasions been involved in negative court decisions as a result of its anti-competitive behaviour. I know Bruce Parkes and I quite like him. I know that it had a lot of expertise in doing that. But with the hundreds, if not thousands, of millions of dollars that Telecom stands to gain as a result of its anti-competitive behaviour, I ask the Minister why he thinks $10 million for a breach of section 69L, or in fact section 69R, which is probably even more important—the line of business restrictions—is considered a sufficient fine.

My view, frankly, is that something in the order of magnitude of $100 million might be the sort of disincentive that is necessary to stop Telecom, or Telecom and Chorus, from going back to the sorts of behaviours that, unfortunately, have characterised their existence over about the last 20 years. They have had a history of providing illegal blocks to reasonable behaviour, and instead of doing what is reasonable and providing a good service, they have relied on lawyers—generally unsuccessfully, I might say—to reinforce their behaviour. It has cost the Crown a fortune in fighting them through the courts, and every time that has occurred there has been a massive delay in terms of improvements in the quality of service to their customers. So why is the penalty only $10 million in that area? That is the question I have for the Minister.

The next question I want to ask the Minister concerns taxation. I turn now to Subpart 6 and refer in particular to section 69XK and section 69XN, which are the interpretation sections around the taxation effects of the demerger. Effectively, this removes from Telecom the obligation to pay tax in the way that any other company in a similar situation and in a similar separation would. I ask the Minister whether he has added that into his calculations.

The CHAIRPERSON (Lindsay Tisch): The member is talking about taxation matters that are in Part 1A, not Part 1. I will ask the member to come back to Part 1.

Hon TREVOR MALLARD: I apologise. I went to Part 2 and then went to the part before it. I am happy to go back and talk about the requirements in respect of preliminary notice, the process issues, which are in new Subpart 3 of Part 1—specifically, in new section 155E. It is probably my fault for working my way backwards. I sincerely apologise; I made the mistake of thinking that the part in front of Part 2 was Part 1, not Part 1A. Of course, if there is a separate debate on that, I will be willing to make my comments again.

I am looking at the requirements in new section 155E—by the way, clause 17B inserts new Subpart 3 into Part 1—around the process, and the question of the method and the requirements in respect of preliminary notices. I ask the Minister whether the contact details outlined in new section 155E(2)(f) have to be physical details—whether a physical address for delivery has to be supplied as far as these contact details for delivery are concerned. It is a question of whether a physical address is required for delivery, or whether email addresses could be supplied. It is a question of the access order, which is referred to in new section 155E(2)(g). If the owner opts out on unreasonable grounds, it is a question of whether there is, as yet, any case law in that area as to what is reasonable, and unreasonable, in relation to opt-outs, which lead to the service provider applying to the District Court for an access order.

So if someone wants access, is it a matter only for the District Court to give an order, or have we created a right of access to individuals? I require a little bit of forgiveness for going back into history, but these access orders were originally reserved for Post Office employees. It was a matter of getting on to a property and getting an order to obtain material that would not otherwise be available.

When the Post Office separated into PostBank, New Zealand Post, and Telecom, these access orders were carried over to Telecom. There was a set of obligations, and some of those enshrined by the Kiwi share and the ability for the Government to give instructions. Now that these instructions are being removed, the question I have is whether we are giving wholly private sector individuals rights of access to people’s property. And what warnings will people get about that? Will they get a warning about the access when they sign up with a service provider? My understanding is that they will not, because there will be continuity of service provision from the old Telecom to this organisation.

I know that these days not a lot of people care very much about civil rights, but I ask members to think about some of the farmers and whether they will be happy with these access requirements—the ability to access to their properties—being carried over to yet another organisation or two. It is not clear yet whether it is just the one organisation or whether it will be both organisations. My reading of it is that in this part it is one organisation, but in the other part it is another.

We think we will eventually have structural separation, with two sets of shares sitting there. Already Telecom, of course, is a largely overseas-owned organisation. If we have the Kiwi share going away, it is likely to be even more so. It is a question of whether we want an Australian, Indian, Chinese, or Canadian-owned company to have access rights to our homes—to our homes—in the way that we were prepared to have the old Post Office officials coming in.

It may be that this Parliament is relaxed about that idea and we do not care about it. I know that for some people of my generation, and for a few people a little bit older, the thought of Mao’s army walking into their homes and doing some inspections of that sort would cause considerable anxiety. But it might be that Parliament is now more liberal and more relaxed, and we do not care about who wanders into people’s homes, or who gets the access being set up under the processes in new section 155E.

There is a question in respect of new section 155H, in relation to access orders from the District Court. There is a question, when there are multi-owner complexes, which is referred to in new section 155H(1)(a), as to whether all of the owners have to be told, or just one of them.

CHRIS TREMAIN (Senior Whip—National) : I move, That the question be now put.

Hon TREVOR MALLARD (Labour—Hutt South) : I raise a point of order, Mr Chairperson. Just before you move on to, I presume, Part 1A, I ask you to have a good look at the summary section, or the index to the bill, and at the way in which it has been marked up. It appears to me—and I have had limited experience with these matters—that Part 2A is sitting before Part 2. I think the tradition is to go 1, 1A, 2, 2A, although it might be just that in the printing of the bill, instead of having a heading for a new subpart of new legislation, the wrong headers have been used, so that it looks like a part of the bill as opposed to a new section.

The CHAIRPERSON (Lindsay Tisch): I thank the member. I have sought advice from the Clerk. Part 2A is substituted by section 23H, which now appears in Part 1A. That is how it is being handled. That is the clarification from the Clerk’s Office.

Hon TREVOR MALLARD: Further to my point of order, in that case can I have an assurance that Part 2A, which clearly has a separate header, is a separate part of the bill.

The CHAIRPERSON (Lindsay Tisch): No, it is not.

Hon TREVOR MALLARD: How can it be—

The CHAIRPERSON (Lindsay Tisch): You asked a question and I am answering it. If we look at section 23H in Part 1A, it substitutes Part 2A. Part 2A is substituted by section 23H, which now forms part of Part 1A. There is no Part 2A debate. Once we have finished Part 1A we will go on to Part 2. Speakers’ Rulings states: “Taking a bill part by part relates to the parts of the bill that are before the committee, not to new parts to be inserted in the principal Act.” I refer the member to Speaker’s ruling 110/3, which clarifies the position we are now in.

Hon TREVOR MALLARD: I am sorry to keep going back, Mr Chairperson, but this is not a new part. I understand that if this was new, then it would all be underlined. I am just checking that it is not all underlined. Is it all completely new, or did it use to be Part 2A when it went to the Finance and Expenditure Committee?

The CHAIRPERSON (Lindsay Tisch): It is a new part of the principal Act. I come back to Speaker’s ruling 110/3. It is a new part of the principal Act. We are taking the bill part by part. It relates to parts of the bill that were before the Committee, not to the new parts to be inserted in the principal Act. That is the ruling.

Hon TREVOR MALLARD: Can I just ask you, Mr Chairperson, to pass back the advice that the more traditional form of drafting in this is to use a different form of heading for something that is a part of this bill as opposed to a new part of an Act, so that members can differentiate. In this case you have explained it very clearly, but this is not well drafted.

The CHAIRPERSON (Lindsay Tisch): There could be a case for the Standing Orders Committee to consider a matter such as this.

Hon Trevor Mallard: You can’t get a Standing Order to draft the bill properly.

The CHAIRPERSON (Lindsay Tisch): The point I am making here is that you asked how we might handle it in the future. I am suggesting a way forward, and that is where we stand.

The CHAIRPERSON (Lindsay Tisch): The debate on this part includes schedule 2A.

CLARE CURRAN (Labour—Dunedin South) : 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.

Hon TREVOR MALLARD (Labour—Hutt South) : 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.

Hon TREVOR MALLARD: 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.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : 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?

PESETA SAM LOTU-IIGA: Miss Curran shouts out “What about New Zealanders?”, and Mr, ah—

Stuart Nash: Nash.

PESETA SAM LOTU-IIGA: 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.

PESETA SAM LOTU-IIGA: 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—

PESETA SAM LOTU-IIGA: 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.

PESETA SAM LOTU-IIGA: If I may?

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

PESETA SAM LOTU-IIGA: 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.

GRANT ROBERTSON (Labour—Wellington Central) : 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.”!

GRANT ROBERTSON: 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.

GRANT ROBERTSON: 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.

STUART NASH (Labour) : 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.

STUART NASH: 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.

DAVID BENNETT (National—Hamilton East) : 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.

DAVID BENNETT: 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.

DAVID BENNETT: 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.

CLARE CURRAN (Labour—Dunedin South) : 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.

CLARE CURRAN: 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.

MICHAEL WOODHOUSE (National) : I move, That the question be now put.

Hon TREVOR MALLARD (Labour—Hutt South) : 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.

Hon TREVOR MALLARD: 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.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : 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.

Hon TREVOR MALLARD (Labour—Hutt South) : 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.

STUART NASH (Labour) : 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.

Hon TREVOR MALLARD (Labour—Hutt South) : 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.