Chapter 1


Chapter 1

Introduction

Conduct of the inquiry

1.1        On 21 March 2013, the Senate Environment and Communications Legislation Committee was referred the provisions of the Telecommunications Legislation Amendment (Consumer Protection) Bill 2013 for inquiry and report by 17 June 2013.[1]

1.2        The provisions of the bill were referred on the recommendation of the Senate Selection of Bills Committee.[2]

1.3        The committee advertised the inquiry on its website and The Australian newspaper and wrote to organisations and individuals to invite submissions. The committee received six submissions, as well as correspondence from the Telecommunications Industry Ombudsman (listed at Appendix 1). The committee thanks those who made submissions.

Summary of the bill

1.4        The bill proposes to make amendments to telecommunications legislation 'to strengthen consumer protections and improve the telecommunications co-regulatory framework'.[3] In particular, the bill proposes to amend three pieces of legislation.

1.5        First, the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Consumer Protection Act), which would be amended to:

  • require the Telecommunications Industry Ombudsman (TIO) scheme to comply with standards determined by the minister; and
  • require periodic independent public reviews of the TIO scheme.

1.6        Second, the Telecommunications Act 1997 (Telecommunications Act) would be amended to:

  • enable industry codes to be varied (rather than wholly replaced);
  • require code developers to publish draft codes, draft code variations and related public submissions; and
  • extend the existing reimbursement scheme to allow code developers to be reimbursed for costs to vary consumer‑related industry codes.

1.7        Finally, the Do Not Call Register Act 2006 (Do Not Call Register Act) would be amended to clarify which party is responsible for making telemarketing calls and sending marketing faxes where third parties are carrying out the marketing activities.

1.8        The proposed amendments to each piece of legislation are outlined in further detail below. Mr Adam Bandt MP (Australian Greens) has put forward an amendment to the bill in the House of Representatives.[4] This proposed amendment is also discussed below.

Consultation on the bill

1.9        In addition to the reviews mentioned below, the committee notes that the Department of Broadband, Communications and the Digital Economy (the department) has consulted with industry, consumer groups and relevant regulatory bodies, such as the TIO and the Australian Communications and Media Authority (ACMA), in relation to the amendments proposed by the bill.[5] This has included the release of an 'exposure draft' of the bill for consultation.[6]

Reforms to TIO scheme

Context of the proposed amendments

1.10      The TIO was established in 1993 to provide a free and independent alternative dispute resolution scheme for small business and residential consumers in Australia who have complaints about their telephone or internet services. Each telecommunications carrier and eligible carriage service provider is required by law to participate in the TIO scheme. The TIO is able to investigate complaints and, where appropriate, make determinations on the matters raised and/or give directions to carriage services about those matters.[7] According to the Explanatory Memorandum, the TIO scheme is not currently required to comply with any regulatory‑based standards.[8]

1.11      The proposed amendments to the Consumer Protection Act are the result of a review of the TIO scheme conducted by the department. On 4 March 2011, the department released a discussion paper seeking views on the effectiveness of the TIO scheme in relation to its:

  • speed, fairness and accuracy;
  • consistency with Alternative Dispute Resolution best practice; and
  • ability to promote and encourage industry efforts to deliver quality internal complaint resolution prior to outside intervention.[9]

1.12      The discussion paper was open for public comment from 4 March to 31 March 2011. According to the department's website, submissions made to the ACMA's 'Reconnecting the Customer' Inquiry which raised issues about the operation of the TIO were also considered as part of the review process.[10]

1.13      On 4 May 2012, the Minister for Broadband, Communications and the Digital Economy announced the release of the Reform of the Telecommunications Industry Ombudsman report (the TIO report).[11] The report's main recommendation was that legislative amendments be made to provide greater clarity around the TIO's role and expected standards of operation. This included the establishment of 'framework principles' under the Consumer Protection Act for the operation of the TIO scheme, based on the Benchmarks for Industry-based Customer Dispute Resolution Schemes (DIST benchmarks).[12]

1.14      The DIST benchmarks were established by the then Department of Industry, Science and Tourism in 1997.[13] The department submitted that the DIST benchmarks are regarded as 'better practice' benchmarks for dispute resolution schemes. The department advises that they have, for example, been adopted by the Australian Securities and Investments Commission, which uses them as a guide in structuring its requirements for approving alternative dispute resolution schemes.[14]

1.15      The TIO report also recommended the introduction of periodic, mandatory, independent and public reviews of the TIO scheme.[15] The department's submission explained that:

There is currently no formal mechanism by which the TIO is independently reviewed. While the TIO memorandum and articles of association provide that the TIO will conduct a review of its operations every three years, in practice reviews of the TIO have not been regular or public.

For example, the TIO board commissioned a review ahead of the Department’s discussion paper in late 2010. However, no public announcement was made about the review or its terms of reference and no opportunity was provided for public submissions.[16]

Overview of amendments to the Consumer Protection Act

1.16      The amendments to the Consumer Protection Act in the bill are intended to improve the operation of the TIO scheme, as recommended by the TIO report, by:

  • providing greater clarity about the TIO's role and expected standards of operation by requiring the TIO scheme to comply with standards determined by the minister, following consultation with the TIO and the industry regulator, ACMA; and
  • requiring periodic public reviews of the TIO scheme conducted by a person or body independent of the TIO and the telecommunications industry.[17]

1.17      Proposed new subsections 128(8) and 128(11) of the Consumer Protection Act will provide the minister with the discretion to determine standards with which the TIO must comply.[18] If the minister makes a determination, he or she must have regard to the matters set out in proposed new subsection 128(10). These matters are derived from the DIST benchmarks, as discussed above. Before making a determination, the minister must consult with the TIO and the ACMA.[19] The minister's determination will be a disallowable instrument under the Legislative Instruments Act 2003.[20]

1.18      The bill also proposes to insert a new section 133A into the Consumer Protection Act to provide for periodic reviews of the TIO scheme. The requirements for reviews of the TIO scheme under section 133A include:

  • to complete the first review within 3 years after commencement of the section, and every 5 years thereafter;
  • reviews are to be conducted by a person or body independent of the TIO and the telecommunications industry;
  • reviews must provide for consultation with the public, as well as the TIO and the ACMA;
  • review reports must be provided to the minister and published on the TIO's website; and
  • the TIO must respond to any review recommendations within 6 months of receiving a report. A copy of the response must be provided to the minister and be published on the TIO's website.[21]

Reform of industry code processes

Context of the proposed amendments

1.19      The bill also proposes to amend the process for registering industry codes under Part 6 of the Telecommunications Act. These proposed amendments are in response to a review of consumer related industry code processes in 2010. According to the department, that review identified three connected issues that would strengthen the code development process:

  • the ability to vary industry codes;
  • greater transparency during the code development process; and
  • reimbursement of code development costs for variations to consumer related industry codes.[22]

1.20      The department further advised that in developing the proposed amendments to the code development process, industry and consumer groups were consulted and were generally supportive of the proposed amendments.[23]

Overview of amendments to the Telecommunications Act

1.21      Part 6 of the Telecommunications Act provides for the development of industry codes by bodies or associations representing industry sections (code developers). Codes must be registered with the ACMA.

1.22      The amendments to the Telecommunications Act proposed by the bill 'are intended to streamline and improve the process for developing and amending industry codes under Part 6 of that Act'.[24] In particular, the bill proposes to amend Part 6 to require code developers to publish on their websites:

  • draft codes and draft variations; and
  • any submissions received from industry participants and members of the public about the draft code or draft variation.[25]

1.23      The Explanatory Memorandum states that these requirements 'are intended to improve transparency and accountability in relation to the development of a code'.[26]

1.24      Further, section 120 of the Telecommunications Act currently requires changes to an industry code to be made by replacing the code. The bill therefore proposes to enable industry codes to be varied following a process similar to that for developing industry codes, rather than requiring them to be wholly replaced.[27] The Explanatory Memorandum states that this will 'enable code developers to be more responsive to emerging issues'.[28]

1.25      A new section 119A would be inserted into Part 6 of the Telecommunications Act to set out the requirements for varying a registered industry code. These requirements would include requiring a code developer to consult with required stakeholders in relation to the code variation.[29] More specifically, the ACMA must approve the draft variation if it is satisfied that:

  • the code variation provides appropriate community safeguards or deals with matters in an appropriate way (depending on the nature of the matters);
  • the code developer has published the draft code variation on its website, invited participants in the relevant industry section and members of the public to make submissions within at least 30 days, considered any such submissions received and published those submissions on its website;
  • the Australian Competition and Consumer Commission, the TIO[30] and at least one consumer representative body or association have been consulted about the draft variation; and
  • where the draft variation relates to privacy issues, the Information Commissioner has been consulted about, and is satisfied with, the draft variation.[31]

1.26      Where a draft variation is of a 'minor nature', the requirements for consultation with industry and the public will not apply to the code variation approval process. The EM states that this is 'similar to the current arrangements for making minor changes to registered industry codes'.[32]

1.27      Division 6A of Part 6 of the Telecommunications Act provides a scheme where an industry body or association may seek reimbursement from the ACMA of certain costs incurred by that body or association in developing consumer-related industry codes. The bill proposes to amend Division 6A to extend the application of the reimbursement scheme for developing consumer-related industry codes to variations of consumer-related industry codes.[33]

Proposed additional amendment to the Telecommunications Act

1.28     Mr Adam Bandt MP (Australian Greens) has put forward an amendment to the bill in the House of Representatives. This amendment would insert a proposed section 61A into the Telecommunications Act to provide that a carrier licence held by Telstra is subject to the condition that any work undertaken by, or at the request of, Telstra or its subsidiaries to produce a Telstra directory must be undertaken in Australia.[34] A 'Telstra directory' is defined to include, for example, the White Pages or the Yellow Pages.[35]

1.29      Telstra is required to produce an alphabetical public number directory annually (the White Pages) as part of its Carrier Licence Conditions.[36] Sensis, a Telstra subsidiary, produces the Yellow Pages and White Pages directories. This proposed amendment follows concerns that Sensis is planning to relocate up to 700 jobs to India.[37]

Amendments to the Do Not Call Register Act

Context of the proposed amendments

1.30      Parts 2 and 2A of the Do Not Call Register Act prohibit making telemarketing calls and sending marketing faxes to a number registered on the Do Not Call Register, subject to certain exceptions. In addition, agreements for the making of telemarketing calls, or the sending of marketing faxes, must require compliance with the Do Not Call Register Act. The ACMA is responsible for the enforcement of the Do Not Call Register Act.

1.31      The amendments to the Do Not Call Register Act were prepared in response to feedback received by the department from the ACMA about the operation of that Act.[38] The Explanatory Memorandum explains that the ACMA has:

....encountered difficulty in establishing evidentiary links between the first person and the other party providing the telemarketing and/or fax marketing services. This has commonly arisen because agreements between the parties relate to the sale and/or marketing of the first person's goods or services without any specific reference to the means by which the goods or services are to be sold and/or marketed.[39]

Overview of amendments to the Do Not Call Register Act

1.32      Currently, subsection 11(1) of the Do Not Call Register Act provides that a person must not make, or cause to be made, an unsolicited telemarketing call to an Australian number registered on the Do Not Call Register. Subsection 11(9) extends the meaning of 'cause' to ensure a person remains responsible for the telemarketing calls, even if they have made arrangements for another party to provide the actual telemarketing services. Section 12 of the Do Not Call Register Act prohibits a person from entering into an agreement with another party to undertake telemarketing calls where the agreement contains no express provision that requires the other party to comply with the Do Not Call Register Act.[40]

1.33      The proposed amendments to the Do Not Call Register Act are designed to capture instances where unsolicited telemarketing calls are likely to be made, or unsolicited marketing faxes are likely to be sent, to fulfil an agreement,[41] rather than as a result of a specific undertaking to do so under an agreement.[42]

1.34      The bill proposes to clarify that there is no requirement for an agreement to expressly provide for the making of telemarketing calls before the first person will be taken to have 'caused' a telemarketing call to be made. This is achieved by amending section 12 and repealing paragraph 11(9)(b) of the Do Not Call Register Act.[43] In particular, the amendments provide that it will be sufficient if there is a reasonable likelihood that the other person will give effect to the agreement by making telemarketing calls (or causing employees or agents to make the calls).[44]

1.35      The bill also proposes to replace the reference in the Do Not Call Register Act to telemarketing calls being 'covered by' the agreement with a requirement that the calls be 'made in order to give effect to' the agreement.[45]

1.36      Finally, the bill proposes to make similar amendments to equivalent provisions for the sending of unsolicited marketing faxes under sections 12B and 12C of the Do Not Call Register Act.

Parliamentary Joint Committee on Human Rights comment on Do Not Call Register Act

1.37      The Parliamentary Joint Committee on Human Rights has functions to examine bills for compatibility with human rights, as defined in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. That committee noted in its report in May 2013 that it intended to write to the Minister for Broadband, Communications and the Digital Economy to seek clarification as to whether the bill limits the right to freedom of expression in the amendments to the Do Not Call Register Act and whether that Act is compatible with the right to freedom of expression.[46]

1.38      The Senate Standing Committee for the Scrutiny of Bills made no comment on the bill.[47]

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