Telstra Corporation Limited and Department of Broadband, Communications and the Digital Economy
[2010] AATA 118
•15 February 2010
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2007/0619
GENERAL ADMINISTRATIVE DIVISION ) 2007/2209Re:TELSTRA CORPORATION LIMITED
Applicant
And:DEPARTMENT OF BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY
Respondent
CORRIGENDUM TO DECISION [2010] AATA 118
With the consent of the parties, the Tribunal amends its decision and reasons for decision published on 15 February 2010 as follows:
1.By adding [239], which reads:
239. In most cases, a decision of the Tribunal takes effect immediately.[1] If one or other of the parties should institute an appeal in the Federal Court, the operation or implementation of the decision is not affected[2] but that Court may make an order staying or otherwise affecting it.[3] I would no longer have power to make such an order. In the meantime, though, I consider that I should use the power given by s 43(5B) of the AAT Act to specify the date on which the decision comes into operation. I have reached that conclusion in view of the decision I have reached, the issues raised by the applications for review and the nature of the documents in issue. Having regard to those matters, I think it appropriate that the operation of my decision should be deferred until the Department has had an opportunity to consider my reasons and, if it wishes, to institute an appeal and seek a stay of my decision from the Federal Court. Therefore, I have decided that the decision I have made does not come into operation until the close of business on 15 March 2010.
[1] AAT Act, s 43(5A)
[2] AAT Act, s 44A(1)
[3] AAT Act, s 44A(2)
2.With reference to [225], varying the decision by:
(1)deleting paragraph 1(2) of the decision and paragraph 1(2) of [238] of the reasons for decision and substituting for those paragraphs the following:
(2)substituting for that part of the decision a decision that the ACCC Report and the ACCC Draft Report are not exempt under the Freedom of Information Act 1982 except in so far as they reveal commercially sensitive information relating to Optus.
(2)deleting paragraph 2(2) of the decision and paragraph 2(2) of [238] of the reasons for decision and substituting for those paragraphs the following:
(2)substituting for that part of the decision a decision that the draft IDC Report, draft DOFA Report and Final DOFA Report are not exempt under the Freedom of Information Act 1982 except in so far as they reveal commercially sensitive information relating to Optus.
S A FORGIE
Deputy President
CATCHWORDS – FREEDOM OF INFORMATION – draft and final ACCC reports and draft IDC report and draft and final of an Appendix to it – whether final documents brought into existence for the purpose of being submitted to Cabinet – whether Senior Ministers’ group a Committee of Cabinet – whether brought into existence to assist Minister and not for Senior Ministers’ group regardless of its status as a Cabinet committee – whether disclosure under the FOI Act of any of the documents would be contrary to the public interest – decisions varied
Administrative Appeals Tribunal Act 1975, ss 33, 37
Archives Act 1983, ss 31, 33
Freedom of Information Act 1982, ss 11, 22, 32-47A, 34, 36, 61
Freedom of Information Act 1992 (Vic), s 50
Judiciary Act 1901, s 39B
Telecommunications Act 199, ss 7, Schedule 1
Telecommunications (Consumer Protection and Service Standards) Act 1999, ss 8, 8A, 9, 1020A, 20B, 20H, 20S, 153, 154, 155, 157
Telecommunications (Universal Service Levy) Act 1997, s 7
Trade Practices Act 1974, ss 2, 151AA, 152AA, 152AB, 152AH, 152AL, 152AQA, 152AQB, 152AY, 152BA, 152BS, 152BU, 152BV, 152CF, 152CH, 152CI, 152CQ
Australian Communist Party v The Commonwealth [1951] HCA 5; (1951) 83 CLR 1
Bell IXL Investments Ltd v Life Therapeutics Ltd [2008] FCA 1457
Bill Williams Pty Ltd v Williams [1972-73] ALR 303
Booker and Department of Social Security AAT 6189, 13 September, 1990
Botany City Counsel v Minister for Transport and Regional Development (1996) 137 ALR 281
Bradshaw v McEwans Pty Ltd (HCA (1951) unreported)
British Steel v Granada Television [1981] AC 1096
Collins v Parker Unreported, SC (NSW), 11 May 1984
Commonwealth of Australia v Lyon (1979) 24 ALR 300
Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 98 FCR 31
Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1
Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529
Director of Public Prosecutions v Smith [1991] 1 VR 63
Egan v Willis (1998) 195 CLR 424
Ellison v Vukicevic (1986) 7 NSWLR 104
FAI Insurances Ltd v Winneke [1982] HCA 26; (1982) 151 CLR 342
Fisse v Secretary, Department of the Treasury [2009] FCAFC 188
Gerhardy v Brown (1985) 159 CLR 70
HA Bachrach Pty Ltd v Caboolture Shire Council (1992) 80 LEGRA 230; [1992] QCA 384
Harris v Australian Broadcasting Corporationand others (1983) 50 ALR 551; 5 ALD 545
Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473; 106 ALR 611
Jordan v Department of Justice 591F (2d) 753 (1978)
Kavvadias v Commonwealth Ombudsman (1984) 2 FCR 64; 54 ALR 285; 6 ALD 198
Kelly v JRA Ltd (1990) 92 ALR 651
Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; 145 ALR 96
London Artists Ltd v Littler [1969] 2 QB 375
Luxton v Vines (1952) 85 CLR 352
McKinnon v Secretary, Department of Treasury (2005) 145 FCR 70
McKinnon v Secretary, Department of the Treasury (2006) 228 CLR 423; 229 ALR 187; 91 ALD 516
Minister for Arts Heritage and Environment v Peko Wallsend Ltd (1987) 75 ALR 218
O’Sullivan v Farrer (1989) 168 CLR 210
R v Turnbull (1958) Tas SR 80
Re Chapman and Minister for Aboriginal and Torres Strait Islander Affairs (1996) 43 ALD 139
Re Howard and Treasurer of the Commonwealth of Australia (1985) 7 ALD 626
Re James and Others and Australian National University (1984) 6 ALD 687
Re Lordsdale Finance Limited and Department of the Treasury [1985] AATA 174
Re McKinnon and Secretary, Department of Prime Minister and Cabinet [2007] AATA 1969
Re Murtagh and Commissioner of Taxation (1984) 54 ALR 313; 6 ALD 112
Re Patterson; Ex parte Taylor (2001) 207 CLR 391
Re Smith and Department of Sustainability and Environment [2006] VCAT 1228; (2006) 25 VAR 65
Re Smith, Kline and French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services [1991] FCA 150
Re Spicer Axle Structural Components Australia Pty Ltd and Secretary, Department of Industry, Tourism and Resources [2005] AATA 77
Re Toomer and Department of Agriculture, Fisheries and Forestry and Ors [2003] AATA 1301
Re Waterford and Department of the Treasury (No.2) (1984) 5 ALD 588
Ruddock v Vadarlis (2001) 183 ALR 1
Sankey v Whitlam (1978) 142 CLR 1
Secretary to the Department of Infrastructure v Asher [2007] VSCA 272
Sinclair v Mining Warden at Maryborough (1975) 132 CLR 473
Smith and Aboriginal and Torres Strait Islander Commission [2000] AATA 512
South Hetton Coal Co Ltd v North-Eastern News Association Ltd [1894] 1 QB 133
Telstra Corporation Ltd (No 2) [2006] ACompT 10
Telstra Corporation Ltd (No 3) [2007] ACompT 3
The Queen v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254
Theodore v Duncan [1919] AC 696
Water Conservation and Irrigation Commission v Browning (1947) 74 CLR 492
Whitlam v Australian Consolidated Press Ltd (1985) 73 FLR 414
Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22
Woods v Multi Sport Holdings Pty Ltd (2002) 208 CLR 460
DECISION AND REASONS FOR DECISION [2010] AATA 118
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2007/0619
GENERAL ADMINISTRATIVE DIVISION ) 2007/2209Re:TELSTRA CORPORATION LIMITED
Applicant
And:DEPARTMENT OF BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 15 February 2010
Place: Melbourne
Decision:The Tribunal decides to:
1.vary the decision of the respondent dated 1 February 2007 by:
(1)setting aside that part of the decision that decided that parts of the documents entitled:
(a)Australian Competition and Consumer Commission – Report to the Government on ULLS Pricing and Retail Price Parity – March 2006 (ACCC Report) (Document 6); and
(b)Status Report on Issues Relating to the ACCC’s Report to Government on ULLS Pricing and Retail Price Parity (ACCC Draft Report) (Document 5);
were exempt under the Freedom of Information Act 1982; and
(2)substituting for that part of the decision a decision that the ACCC Report and the ACCC Draft Report are not exempt under the Freedom of Information Act 1982;
2.vary the decision of the respondent dated 2 May 2007 by:
(1)setting aside that part of the decision that decided that:
(a)a draft of an Inter Department Committee report entitled “Assessment of Telstra’s Proposal to Require Unbundled Local Loop Prices to be Averaged” (draft IDC Report) (Document 2);
(b)a draft Department of Finance and Administration Report being Appendix A to the draft IDC Report (draft DOFA Report) (Document 3); and
(c)the Final Department of Finance and Administration Report being Appendix A to the Final IDC Report (Final DOFA Report) (Document 4A);
were exempt under the Freedom of Information Act 1982; and
(2)substituting for that part of the decision a decision that the draft IDC Report, draft DOFA Report and Final DOFA Report are not exempt under the Freedom of Information Act 1982.
S A Forgie
Deputy President
REASONS FOR DECISION
The applicant, Telstra Corporation Limited (Telstra), made three requests to the respondent, the Department of Broadband, Communications and the Digital Economy (Department) for access to certain documents under the Freedom
of Information Act 1982 (FOI Act). The Department has given access to some of the documents coming within the requests but five remain in dispute. It has claimed that two are exempt from access on the basis that they are Cabinet documents within the meaning of s 34. With regard to all five documents, it has submitted that they come within the description of documents found in s 36(1)(a) and that access under the FOI Act would be contrary to the public interest within the meaning of s 36(1)(b). I have not accepted that the documents are exempt under either or both of ss 34 and 36. Therefore, I have set aside the decisions and substituted decisions that access be given to the documents.
THE REQUESTS
Following the release of a Press Release by the Minister dated
19 December 2006 referring to a number of requests she had made of the Australian Competition and Consumer Commission (ACCC), Telstra made three requests under the FOI Act for access to documents.(1)5 October 2006
(first request)
Request addressed to the Department for copies of any documents provided by the ACCC addressing any of the requests made to it and referred to in the Press Release (Requests) being:
(a)a request for information in relation to the impact of the Government’s decision “to make explicit Telstra’s retail price parity obligations” on the Commission’s wholesale Unconditioned Local Loop (ULL) pricing decisions;
(b)a request to report on whether the Commission’s “current approach to ULL pricing sufficiently takes into account Telstra’s capacity to maintain average retail prices consistent with the Government’s policy on retail pricing parity”;
(c)a request that the Commission ensure that “its ULL pricing decisions enable the maintenance of retail pricing parity while not placing an unreasonable burden on any industry player”; and
(d)a request for the Commission to advise of “any adverse impact on Telstra’s ability to deliver on the Government’s commitment to retail price parity for Australians and to come up with strategies to address any problems identified”.[4]
[4] T documents at 107-108
(2)5 October 2006
(second request)
Request addressed to the Commission for copies of documents provided by the ACCC and addressing any of the Requests made to it.[5]
[5] T documents at 109-110
(3) 12 January 2007
(third request)
The third request was in fact three requests made in identical terms to three different Departments: Department of Prime Minister & Cabinet (PM&C),[6] Department of Finance and Administration (DOFA)[7] and Department of Transport and Regional Services (DOTARS) for the following documents:
(a)Regulation of Unconditioned Local Loop Service: ACCC presentation to the Inter Departmental Committee (IDC) formed to consider Telstra’s Request for a Ministerial Pricing Determination for Averaged ULLS Prices;
(b)Draft IDC report on ULLS retail parity; and
(c)IDC report – Telstra’s unconditioned local loop service (ULLS) – Department of Finance and Administration Report.
Each of the three Departments transferred the request it received to the Department under s 16 of the FOI Act.
[6] T documents at 222
[7] T documents at 223
DOCUMENTS IN DISPUTE
There are five documents remaining in dispute between the parties. Those documents, together with a reference to the exemptions claimed by the Department are:
| Document Number | Author | Date | Description | Exemption claimed |
| 2 | IDC | October 2005 | Draft IDC report: “Assessment of Telstra’s Proposal to Require Unbundled Local Loop Prices to be Averaged” | s 36 |
| 3 | DOFA[8] | October 2005 | Draft DOFA Report being Appendix A to the Draft IDC Report | s 36 |
| 4A. | DOFA | Final DOFA Report being Appendix A to the Final IDC Report | ss 34 and 36 | |
| 5. | ACCC[9] | March 2006 | Draft ACCC Report: “Status Report on Issues Relating to the ACCC’s Report to Government on ULLS Pricing and Retail Price Parity” | s 36 |
| 6. | ACCC | 26 March 2006 | Final ACCC Report: “Australian Competition and Consumer Commission – Report to the Government on ULLS Pricing and Retail Price Parity – March 2006” | ss 34 and 36 |
[8] DOFA: Department of Foreign Affairs
[9] ACCC: Australian Competition and Consumer Commission
Document 4 listed in the Schedule of documents prepared on behalf of the Department is a letter from the Minister to Mr Graeme Samuel, the Chairman of the ACCC. It does not fall within Telstra’s request but it has been agreed between the parties that it is relevant to the Department’s claim for exemption in respect of Document 2 shown in the Schedule being the draft IDC report.
I find that the differences between Documents 5 and 6 are these:
“I have compared the draft and final ACCC reports. I note that the draft ACCC report differs from the final. While a large proportion of the text in the body of the draft ACCC report has carried through to the final ACCC report, the final ACCC report contains additional text and reflects some restructuring of the draft ACCC report. …”[10]
[10] Affidavit of Ms Myra Croke, Exhibit 2 at [36]
WITNESSES
Ms Jennifer Goddard has been the Deputy Secretary of PM&C since July 2004. In that position, she has oversight of the Cabinet, Economic and Industry, Infrastructure and Environment Divisions of PM&C. Among the responsibilities assigned to those Divisions is the responsibility to advise the Prime Minister on policy and process issues relating to the Cabinet and the organisation of its business.
previously worked in the Commonwealth Department of Treasury from 1984 to 1996 before moving to PM7C and holding the position of First Assistant Secretary of the Economic Division in PM&C from October 2001 to July 2004. Throughout her career in PM&C, she has worked extensively on processes relating to Cabinet including the preparation of materials for its consideration and briefing papers for Ministers for their participation in Cabinet. On occasion, she has attended Cabinet meetings as a notetaker.
Ms Goddard
Ms Myra Croke is the Assistant Secretary, Cabinet Secretariat, in the Cabinet Division of PM&C. She has held that position since September 2003. In that role, she heads the Cabinet Secretariat. She has previously held various senior positions including Senate Parliamentary Liaison Officer (SPLO), Senior Adviser, Cabinet Secretariat and Secretary to the Federal Executive Council. As the Section Head of the Parliamentary Affairs and Legislation Section (PAL Section) in the Government Division of PM&C, she attended all meetings of the Parliamentary Business Committee (PBC) where she was a notetaker. In her later role as SPLO, she also attended those meetings. The PAL Section provided secretarial support to that committee.
Mr William Gallagher is General Counsel for the Public Policy & Communications business unit of Telstra. He has held that position since January 2006. The unit manages Telstra’s relationships with key external stakeholders including Commonwealth and State governments, regulators and the media.
Mr Gallagher provides legal advice on policy, regulatory and media issues across Telstra’s operations. Previously, he was employed in the Telstra’s Legal Services business unit. Earlier, he had been employed in a private firm of solicitors but had undertaken three secondments to Telstra’s Legal Services business unit between April 1998 and October 1999. From October 1999 until November 2000, Mr Gallagher was seconded to Telstra’s Wholesale business unit and, from January 2003 and October 2003 and April 2004 to March 2005 to its Regulatory group.
BACKGROUND
Where I have made findings of fact in this section of my reasons,
I have referred to the evidence on which I rely either in the text or in the footnotes.
A.Telecommunications Act 1997 and Trade Practices Act 1974
Telecommunications service providers do not have a general right of access to telecommunications facilities and carriage services of rival providers or carriers. Access is, however, permitted within the parameters provided by the Telecommunications Act 1997 (Telecommunications Act) and the Trade Practices Act 1974 (TP Act). The Telecommunications Act provides a regime for access to telecommunications facilities such as telephone exchange buildings and mobile phone towers.[11]
[11] Telecommunications Act, Schedule 1
The TP Act is intended to “… enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.”[12] Part XIB establishes a special regime for regulating anti-competitive conduct in the telecommunications industry. That is a regime that operates in addition to the restrictive trade provisions of Part IV of the TP Act.[13] Part XIC sets out a telecommunications access regime. Under that regime, the ACCC may declare carriage services and related services to be declared services.[14] The ACCC must conduct a public inquiry under Part 25 of the Telecommunications Act, publish its report about the inquiry and be satisfied that the making of the declaration will promote long-term interests of end-users of carriage services or of services provided by means of carriage services before it may make a declaration.[15]
[12] TP Act, s 2
[13] TP Act, s 151AA
[14] TP Act, s 152AL
[15] TP Act, s 152AL(3)
Section152AH sets out:
“(1) For the purposes of this Part, in determining whether particular terms and conditions are reasonable, regard must be had to the following matters:
(a)whether the terms and conditions promote the long‑term interests of end‑users of carriage services or of services supplied by means of carriage services;
(b)the legitimate business interests of the carrier or carriage service provider concerned, and the carrier’s or provider’s investment in facilities used to supply the declared service concerned;
(c)the interests of persons who have rights to use the declared service concerned;
(d)the direct costs of providing access to the declared service concerned;
(e)the operational and technical requirements necessary for the safe and reliable operation of a carriage service, a telecommunications network or a facility;
(f)the economically efficient operation of a carriage service, a telecommunications network or a facility.”
Section 152AH(2) provides that subsection (1) does not, by implication, limit the matters to which regard may be had in determining whether the terms and conditions specified in the undertaking are reasonable.
Section 152AB(2) is relevant in interpreting s 152AH(1)(a) for it provides, in part, that in determining whether the terms and conditions of an undertaking promote the long‑term interests of end‑users of carriage services or services supplied by means of carriage services, the ACCC must have regard to the extent to which the terms and conditions are likely to result in the achievement of the following objectives:
“(c)the objective of promoting competition in markets for listed services;
(d)the objective of achieving any‑to‑any connectivity in relation to carriage services that involve communication between end‑users;
(e)the objective of encouraging the economically efficient use of, and the economically efficient investment in:
(i)the infrastructure by which listed services are supplied; and
(ii)any other infrastructure by which listed services are, or are likely to become, capable of being supplied.”
Section 152AB(3) provides that subsection (2) is intended to limit the matters to which regard may be had.
Section 152AH(4) provides that, in determining the extent to which a particular thing is likely to result in the achievement of the objective referred to in
s 152AH(2)(c), regard must be had to the extent to which the thing will remove obstacles to end-users of listed services gaining access to listed services. The remaining provisions deal with other objectives referred to in s 152AH(2).
The ACCC must determine principles relating to the price of access to a declared service.[16] Section 152AQB provides that certain services are core services. The ACCC must make a written determination setting out model terms and conditions relating to access to each core service.[17]
[16] TP Act, s 152AQA(1)
[17] TP Act, s 152AQA(2) and (3)
Carriers and carriage service providers providing declared services must comply with standard access obligations.[18] Divisions 3, 4 and 5 of Part XIC deal with aspects of those obligations. Division 5, for example, relates to ordinary access undertakings i.e. a written undertaking given by a carrier or a carriage service
provider to the ACCC under which the carrier or provider undertakes to comply with the terms and conditions specified in the undertaking in relation to the applicable standard access obligations.[19] Those undertakings must be in a form approved by the ACCC.[20] A carrier or carriage service provider may give the ACCC an ordinary access undertaking.[21] The ACCC must either accept or reject the undertaking.[22]If the undertaking does not adopt a set of model terms and conditions set out in the telecommunications access code, the ACCC must not accept the undertaking unless it has first published the undertaking and invited people to make submissions on it, considered those submissions and is satisfied of several matters. Among those matters is that the undertaking is consistent with the standard access obligations applicable to the carrier or provider and, if the undertaking deals with price or a method of ascertaining price, it is satisfied that the undertaking is consistent with any Ministerial pricing determination.[23] Once the ACCC has accepted an undertaking, it must not make a determination on an arbitration between two service providers that is inconsistent with the undertaking.[24][18] TP Act, s 152AA and see also ss 152AY-152BA
[19] TP Act, s 152BS(1)
[20] TP Act, s 152BS(6)
[21] TP Act, s 152BU(1)
[22] TP Act, s 152BU(2)
[23] TP Act, s 152BV(2)
[24] TP Act, s 152CQ(5)
Ministerial pricing determinations are the subject of Division 6 of Part XIC. Section 152CH(1) provides:
“The Minister may make a written determination setting out principles dealing with price-related terms and conditions relating to the standard access obligations. The determination is to be known as a Ministerial pricing determination.”
If a Ministerial determination is made, regard must be had to it in certain circumstances. So, for example, the ACCC must not make an ACCC telecommunications access code unless the code is consistent with the Ministerial pricing determination[25] and it must not accept an access undertaking dealing with price or method of ascertaining price unless the undertaking is consistent with any Ministerial pricing determination[26] or determine an arbitration in a manner inconsistent with a Ministerial determination.[27]
[25] TP Act, s 152BV(2)
[26] TP Act, s 152CI(1)
[27] TP Act, s 152CQ(3)
B. The Unconditional Local Loop Service
On the basis of Mr Gallagher’s evidence, I find that the unconditioned local loop (ULL) is unconditioned cable running from a telephone exchange building, or a point housed within street-based equipment, to an end customer’s premises. Usually, the cable is a copper wire pair. The ULL service (ULLS) is a service provided by Telstra to its competitors for access to the ULL. Telstra’s competitors have use of the cable but the cable is unconditioned in the sense that the cable does not have a dial tone or carriage equipment necessary for the provision of a communications service. Telstra’s competitors can provide its own carriage equipment in a telephone exchange to provide services to the end user in competition with Telstra. Those services may include standard conventional voice services and high speed internet access and different services can be provided on different frequencies on the same cable.
The ACCC made a declaration under s 152AL of the TP Act that the ULLS was a declared service for the purposes of Part XIC. It first did so in August 1999. Minor variations to the definitions of certain terms were made in May 2000 and a further declaration for a further period of three years was made in July 2006.
C.Pricing of the ULLS
Access charges for use of the ULLS have been set by the ACCC. These are charges separate from other charges such as connection charges. The ACCC has set a pricing structure based on four geographical regions or bands: the central business district (CBD), metropolitan areas beyond the CBD, rural and regional areas and remote areas. The ACCC has adopted a cost-based approach to determine access pricing for a number of declared services, including ULLS. That approach means that prices are determined by reference to, or are intended to reflect, the actual costs of providing the service. In the case of the ULLS, the ACCC has adopted a geographically de-averaged pricing approach. This means that the total cost of the copper network in the particular band is divided by the number of customers in that band in order to reach a unit cost and so a price per customer. The ACCC has maintained its position that ULLS charges should be geographically de-averaged in its ULLS Pricing Principles.[28]
[28] See Unconditioned Local Loop Service Pricing Principles and Indicative Prices, June 2008 at 5 and Schedule 1: Exhibit C, Exhibit WDG 4
D.Universal Service Obligation
Part 2 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (TCPSS Act) establishes a universal service regime (USR) involving the universal service obligation (USO) and universal service subsidy, the digital data service obligation (DDSO) and digital data cost and arrangements for collecting and distributing universal service levy.
The USO is the obligation:
“(a) to ensure that standard telephone services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business; and
(b) to ensure that payphones are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business; and
(c) to ensure that prescribed carriage services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business.”[29]
[29] TCPSS Act, s 9(1)
The DSO is the obligation:
“(a) to ensure that one or other of the following:
(i) general digital data services;
(ii) special digital data services;
are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business; and
(b) to ensure that general digital data services are reasonably accessible to at least 96% of the Australian population on an equitable basis; and
(c) to ensure that special digital data services are reasonably accessible to the remainder of the Australian population on an equitable basis.”[30]
[30] TCPSS Act, s 10(1)
Among the outcomes sought to be achieved by an USR are that:
all people in Australia, wherever they reside or carry on business, should have reasonable access, on an equitable basis, to:
(i) standard telephone services; and
(ii) payphones; and
(iii) prescribed carriage services; and
(iv) digital data services”[31]
The USR also intends that the USO and the DSO should be fulfilled effectively, efficiently and economically in ways consistent with Australia’s open and competitive telecommunications regime and, as far as practicable, responsive to the needs of consumers.[32] Both should generally be open to competition among carriers and carriage service providers.[33] Information on the basis on which decisions are made for the purposes of the universal service regime should generally be open to public scrutiny.[34]
[31] TCPSS Act, s 8A(1)(a)
[32] TCPSS Act, s 8A(1)(b)
[33] TCPSS Act, s 8A(1)(c)
[34] TCPSS Act, s 8A(1)(f)
Sections 8A(1)(d), (e) and (f) are concerned with funding the USR. Therefore, Part 2 of the TCPSS is intended also to give effect to the following policy
principles:
“(d) specific and predictable funding arrangements to advance the fulfilment of the universal service obligation, particularly in high cost areas, should be available;
(e) providers of telecommunications services should contribute, in a way that is equitable and reasonable, to the funding of the universal service obligation and digital data service obligation;
(f) information on the basis on which decisions are made for the purposes of the universal service regime should generally be open to public scrutiny”.
One of the key elements of the USR is the assessment, collection, recovery and distribution of the levy imposed by the Telecommunications (Universal Service Levy) Act 1997 (TUSL Act).[35] In order to fund the USO, the Australian Communications and Media Authority (ACMA) must assess the eligible revenue of
a participating person for an eligible revenue period. In general terms, a “participating person” for an eligible revenue period is a person who was a carrier or, if the Minister makes a determination that carriage providers are participating persons, was a carriage service provider during that period.[36] A participating person’s eligible revenue is that amount “… taken to be the person’s eligible revenue for that period in accordance with a determination in writing made by the ACMA for the purposes of …” s 20B(1).[37] On the basis of Mr Gallagher’s affidavit, I find that, broadly, the eligible revenue of a carrier who is a participating person is its sales revenue less revenue earned from international services, customer equipment, content services and interconnection costs.[35] TCPSS Act, s 8(k)
[36] TCPSS Act, s 20A(1)
[37] TCPSS Act, s 20B(1)
Having regard to the eligible revenue of the participating person and the total eligible revenue, ACMA must work out a levy contribution factor.[38] That factor is then used to work out the levy debit of a participating person under s 20R of the TCPSS Act. ACMA also works out any levy credit under s 20N. If a person’s levy debit exceeds the person’s levy credit, that person has a levy debit balance for that period.[39] The amount of levy imposed under the TUSL Act is equal to any levy debt balance that the person has under the TCPSS Act.[40]
[38] TCPSS Act, s 20H
[39] TCPSS Act, s 20S(a)
[40] TUSL Act, s 7
E.Price control arrangements relating to Telstra
Part 9 of the TCPSS Act provides for price control arrangements for carriage services, content services and facilities supplied by Telstra. Under s 154(1), the Minister may determine in writing that specified carrier charges are subject to price control arrangements. A “carrier charge” means a charge for a carriage service or a content service supplied by Telstra.[41] Where a carrier charge is subject to price control arrangements, the Minister may determine price-cap arrangements and other price control arrangements that are to be applied in relation to the charge, or principles in accordance with which Telstra is to make alterations to the charge or both. That determination must be in writing.[42] The arrangements may relate to charges for untimed local calls in particular areas.[43]
[41] TCPSS Act, s 153
[42] TCPSS Act, s 155(1)
[43] TCPSS Act, s 155(3)
The Minister made Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005 (TCC Determination) on 22 December 2005 and amended it on 28 February 2006. Under that Determination, Telstra must offer local calls and basic line rental services to residential, charity and business customers in non-metropolitan areas at the same or
a lower price per call and on the same price-related terms as it offers those calls and basic line rental services to those customers in metropolitan areas.[44][44] TCC Determination, cll 16(5) and (6) and 19A(1) and (2)
On the basis of Mr Gallagher’s evidence, I find that the Determination made compulsory what had been Telstra’s long held policy that it offer its services to all of its customers at uniform national prices. I also find that its policy has, in the past, enabled Telstra to use revenue from customers in higher density, and so lower cost, areas such as the CBD and metropolitan bands to subsidise higher cost services in the more sparsely populated areas in Australia. In that way, Telstra could maintain its single price policy throughout Australia.
F.Telstra’s ULLS undertakings before 2005
On the basis of Mr Gallagher’s evidence, I find that Telstra lodged
a number of ULLS undertakings for consideration by the ACCC in 2003 and 2004. They were submitted at different prices on a geographically de-averaged pricing construct consistent with ACCC’s preferred pricing construct for ULLS. After undertaking public consultations, the ACCC rejected the undertakings on the basis that it was not satisfied that the terms and conditions of undertakings were reasonable.
Since 2005, Telstra has opposed the ACCC’s geographically de-averaged pricing structure for ULLS and believes that the price for ULLS should be averaged across all users in Australia. That would be consistent, it believes, with its own pricing policy at the retail level and its pricing policy obligations under the TCC Determination. Telstra’s concern is that geographically de-averaged ULLS prices create incentive for competitors who acquire ULLS to “cherry pick” or selectively supply services in the more profitable metropolitan areas where their cost base is lower while ignoring the high cost, and so less profitable, areas in regional and remote Australia. Over time, Telstra believes, competitive forces will increasingly lead to reduced prices for retail and business services in metropolitan areas. Reduced prices in the CBD and metropolitan areas will erode the subsidy Telstra earns in those areas and so undermine its ability to subsidise the high cost services it provides in regional and remote areas. As it believes the USO is under-funded, the subsidy is the only means available to it to cover the losses it incurs in regional and remote areas. Telstra also believes that geographically de-averaged prices will undermine any uniform national pricing policy reinforced by the TCC Determination. That is so because the retail prices in low cost areas will fall below the national average price.
Telstra believes that geographically averaged ULLS prices will reduce, although not eliminate, the effects it points to. It will not eliminate them because some of Telstra’s competitors have established networks of their own in metropolitan areas and so would benefit from lower costs in those areas.
G.Telstra’s request for a Ministerial determination
In mid 2005, Telstra asked the Minister for Communications, Information Technology and the Arts (Minister) to make a Ministerial pricing determination under s 152CH of the TP Act to require averaged ULLS access charges. Telstra claimed that, if its request were denied, it would be forced to increase significantly the line rental it charged its rural customers. I make this finding on the basis of Mr Gallagher’s affidavit.[45]
[45] Exhibit C at [31]
H.Initial Cabinet consideration of price control arrangements to apply to Telstra
On 15 August 2005, Cabinet considered the issue of price control arrangements to apply to Telstra from 1 January 2006 including line rental parity.
I have had regard to both the evidence of Ms Holthuyzen and to the second affidavit of Ms Croke.[46] They describe events slightly differently.[46] Exhibit 3 at [6]
Ms Holthuyzen described them in this way:
“9. On 15 August 2005, Cabinet considered the issue of price control arrangements to apply to the Applicant from 1 January 2006, including line rental parity. Cabinet resolved that the Minister should seek the Applicant’s views on options to deliver wholesale price averaging and retail price averaging and finalise any regulatory changes in consultation with Senior Ministers.
10.As part of this process DCITA convened an inter-departmental committee (IDC) to consider these matters. …”[47]
[47] T documents at 143 at [9]
Ms Croke saw the events in this way:
“6. It is apparent from the relevant Cabinet File that in August 2005 Cabinet asked the then Minister for Communications, Information Technology and the Arts, Senator the Hon Helen Coonan (‘The Minister’) to assess the issue of averaging ULL prices. The IDC report was commissioned by the Minister and DOFA prepared a separate report setting out its views, which was attached as Appendix A to the final IDC report. The Minister subsequently forwarded the IDC report to the Prime Minister and Senior Ministers seeking consideration of the issues and the IDC report was taken into the Cabinet room and available for consideration at a 19 December 2005 meeting of Senior Ministers.
7.The final IDC report together with the final DOFA Addendum report (Appendix A to the final IDC Report) is on the Cabinet file which
I have perused for the purpose of swearing this affidavit.”[48][48] Exhibit 3. See also Exhibit 2 at [29]
I do no more than set out the evidence on this point at this stage and will return to it later in these reasons.
Preparation and handling of submissions to Cabinet
Clause 4.1 of the Cabinet Handbook sets out the manner in which matters come before Cabinet or its committees:
“(a) submissions and memoranda;
(b)matters without submission (ie ‘under the line’ matters) as agreed by the Prime Minister – usually only matters of genuine urgency requiring immediate Cabinet discussion (but not so complex as to require a submission) or appointments which the Prime Minister wishes to have discussed; and
(c)minutes for endorsement by Cabinet, either from Committees or as drafts following a ten-day ministerial consideration …”[49]
[49] Exhibit 2, Annexure MC1. Clause 4.4B describes the ten-day ministerial consideration period as the period during which certain matters remain available for consideration by Ministers. They are matters identified by the Prime Minister as not requiring detailed discussion in Cabinet. Should no Minister raise any concerns with the Secretary to Cabinet about the recommendations in the submission, a draft minute based on those recommendations is scheduled for consideration and endorsement at the next Cabinet meeting.
On the basis of Ms Croke’s evidence, I find that Ministers do, on occasion, take material to the Cabinet or committee meeting that is additional to the submissions and memoranda or, in the case of an under the line matter, the letter from the relevant Minister to the Prime Minister. This material may be circulated at the meeting to other Ministers or may be made available to them after the meeting. Submissions and memoranda must comply with The Drafter’s Guide.
J.The Interdepartmental Committee
On the basis of Ms Holthuyzen’s evidence, supported by that of
, I find that the Department convened an inter-departmental committee (IDC) to consider the issues. Officers of DCITA, PM&C, Treasury, DOFA and the Department of Transport and Regional Services formed the IDC. That IDC prepared a majority report supported by all but DOFA. DOFA prepared a minority report and it became Appendix A to the final IDC report. The IDC submitted both reports to the Minister.
Ms Croke
K.Meetings of the Senior Ministers
On the basis of Ms Croke’s evidence, I find that, in most cases, matters considered by Senior Ministers were under-the-line items. For the Budget process, those matters complied with the requirements set out in the Budget process rules that had been agreed by Cabinet and were contained in a Cabinet decision. They tended to take decisions of high level strategic importance. They took final decisions on Cabinet submissions and memoranda during at least three of their meetings.
During the first of those meetings on 1 May 2002, the Senior Ministers considered eight Cabinet submissions and one Cabinet memorandum. Each of their decisions was regarded as a final decision of Cabinet and recorded in a Cabinet minute. Some of those submissions had previously been considered by Cabinet on two or three occasions but the Senior Ministers took the final decision. Their second meeting was held on 11 April 2006.[50] In addition to considering matters without submission, they also considered one Cabinet submission and took a final decision on that Cabinet submission. At their third meeting on 27 November 2006, Senior Ministers considered and took a final decision on one Cabinet memorandum. In all, between October 2004 and December 2007, Senior Ministers met on 15 occasions and considered a total of 131 items at those meetings. Of those items, 128 were without submission, two were Cabinet submissions and one was a Cabinet memorandum.
[50] See [57] below
On the basis of Ms Croke’s oral evidence, I find that the Cabinet Secretariat would either be contacted by the Prime Minister’s office or briefed by the Secretary to Cabinet to organise a Senior Ministers’ meeting or the Senior Ministers themselves would nominate a future time during a meeting.[51]
[51] Transcript at 37
There is no suggestion in the evidence that the Senior Ministers were considering Budgetary matters when they considered issues relating to Telstra and the ULLS. The Minister submitted both the majority and the minority IDC reports to the Senior Ministers. She did so asking them to consider further Telstra’s price control arrangements. The Minister also sent a letter for their consideration. On the basis of Ms Croke’s evidence, I find that the IDC report was available for the Senior Ministers’ consideration at their meeting on 19 December 2005.
L. Meeting of Senior Ministers on 19 December 2005
Ms Croke did not attend the meeting of Senior Ministers held on
19 December 2005 but was advised by the Secretary to Cabinet that the IDC report had been in the room and available for consideration by Senior Ministers. She had also been advised that the Cabinet Secretariat did not circulate the IDC report to the Senior Ministers for that meeting.[52] In contrast, the Cabinet Secretariat did circulate the Minister’s letter dated 19 December 2005.[53] That accorded with the practice prescribed in the Cabinet Handbook and with the Cabinet Secretariat’s preferred approach based on its wanting to ensure that Ministers receive papers in advance of meetings.[54] Cabinet Secretariat’s preferred approach is not always the approach in practice although I accept Ms Croke’s evidence that it tries to limit the number of deviations from it.[55][52] T documents at 282 and Transcript at 24
[53] T documents at 282 and Transcript at 24
[54] Transcript at 24 and Cabinet Handbook at [1.11]: Exhibit 2, Annexure MC 1
[55] Transcript at 26
Although plainly hearsay as to what was done by the Cabinet Secretariat on the particular occasion and what was available in the Cabinet room,[56]
I have no reason to doubt the accuracy of what Ms Croke was told. It accords with what would normally and logically occur and I accept that it did in fact occur.[56] “In a proceeding before the Tribunal: … (c) the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate.”: AAT Act, s 33(1)(c)
Like Ms Croke, Ms Holthuyzen was not at the Senior Ministers’ meeting. Ms Croke’s understanding is based on a Cabinet record and it was that “… the ACCC report was commissioned by Senior Ministers at its meeting on 19 December 2005 for the purpose of further consideration by the then Government.”[57] Ms Holthuyzen did not set out the basis of her understanding of what was decided at the Senior Ministers’ meeting but her understanding was that:
“… Senior Ministers resolved that ACCC be required to report to government as soon as possible, on the following matters:
(a)whether the current ACCC approach to ULLS took into account Telstra’s capacity to maintain average retail prices consistent with the government’s retail pricing parity policy; and
(b)how the ACCC would ensure that the ULLS pricing decisions enable the maintenance of retail pricing parity while not placing an unreasonable burden on any industry player.”[58]
[57] Exhibit 2 at [34]
[58] Exhibit 1 at 144
On 19 December 2005, a Joint Media Release was issued by the Minister and the Minister for Finance and Administration, Senator the Hon Nick Minchin. It began in this way:
“The Government today considered the issue of retail pricing parity and the Australian Competition and Consumer Commission (ACCC) setting wholesale access prices for the unconditioned local loop (ULL).
The Government has decided to make explicit Telstra’s retail pricing parity obligations, and, in light of this, will now seek further information from the ACCC about the impact of this policy on its wholesale ULL pricing decisions. On the basis of this advice the Government will determine whether any further action is required to ensure Telstra is able to fulfil its pricing parity requirements.
The ULL was declared as a regulated service by the ACCC in 1999 to encourage competition by enabling Telstra’s competitors to connect their own equipment to Telstra’s copper phone lines. The ACCC determines the price of access for Telstra’s competitors to all regulated services by either accepting or rejecting an undertaking given to it by Telstra or by arbitrating individual access disputes.
The ACCC is currently finalising a decision on whether to accept or reject an undertaking from Telstra for ULL prices. However, while this process has been underway, Telstra has separately sought Government intervention to direct the ACCC on how ULL prices should be determined.”[59]
[59] Exhibit C, Exhibit WDG 6
The Ministers said that the following decisions had been made and action taken:
(1)“In light of the Government’s policy of retail price parity in regional areas, the ACCC will be asked to report to Government on whether its current approach to ULL pricing sufficiently takes into account Telstra’s capacity to maintain average retail prices consistent with the Government’s policy on retail pricing parity, prior to finalising its decision on access pricing. …”[60]
(2)“The ACCC will also be required to ensure that its ULL pricing decisions enable the maintenance of retail pricing parity while not placing an unreasonable burden on any industry player and to report to the Government on how this will be achieved. …”[61]
(3)“The Government will ask the ACCC to monitor and advise of any adverse impact on Telstra’s ability to deliver on the Government’s commitment to retail price parity for Australians and to come up with strategies to address any problems identified.”[62]
(4)“To ensure ongoing price parity, the Government will also make more explicit Telstra’s price parity obligation by including in the price controls a requirement that Telstra offer a basic line rental product at the same price across the country. …”[63]
[60] Exhibit C, Exhibit WDG 6
[61] Exhibit C, Exhibit WDG 6
[62] Exhibit C, Exhibit WDG 6
[63] Exhibit C, Exhibit WDG 6
The wording is a little different from that used by Ms Holthuyzen to describe the Senior Ministers’ decisions but the import is the same.
L.Minister’s implementation of Senior Ministers’ decision
After the Senior Ministers’ decision, the Minister wrote to the ACCC to report to the government about these matters. She did so in a letter dated
22 December 2005.[64] Her letter read in part:[64] T documents at 73-74
“I am writing to request advice from the Australian Competition and Consumer Commission (ACCC) to give effect to the Government’s recent consideration of matters relating to the pricing of the unconditioned local loop (ULL) service and to advise you of the Government’s decisions regarding price control compliance and retail price parity.
As you are aware, Telstra approached the Government asking it to use the Ministerial Pricing Determination provisions in Section 152 of the Trade Practices Act 1974 to require the ACCC to use an averaged basis for making pricing decisions in relation to the declared ULL service. Telstra’s request was based on an argument that de-averaged ULL prices threaten its capacity to continue to provide averaged retail line rental prices, in line with the Government’s commitment to broad retail price parity for this service.
The Government has now considered an Interdepartmental Committee report into the issues raised by Telstra, and did not decide to issue a Ministerial Pricing Determination in relation to ULL pricing. In considering these issues, the Government accepts that the interaction between wholesale access pricing decisions and retail pricing regulation is complex.
…
I therefore request that the ACCC:
provide a report to Government on whether the current approach to ULL pricing takes into account Telstra’s capacity to maintain averaged retail prices consistent with the Government’s retail pricing parity policy;
provide a report to the Government on how it can be ensured that its ULL pricing decisions enable the maintenance of retail pricing parity while not placing an unreasonable burden on any industry player; and
monitor the development of the ULL market on an ongoing basis and advise the Government if there is evidence that Telstra’s capacity to offer retail pricing parity is being undermined.
I would appreciate your report as soon as possible, but no later than
31 March 2006.The Government has also decided to formalise its commitment to retail pricing parity by agreeing to introduce a requirement for Telstra to offer a basic line rental product at the same price across Australia.
The parity requirement will be implemented through an amendment to the Telstra Carrier Charges – Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2005 (the Determination) early in 2006. The amendment will require Telstra to offer the Homeline Part and Businessline Part basic line rental services at the same price across Australia with local calls made using the products capped at 22 cents.
In addition Government also agreed to amend the Determination so that Telstra’s Homeline Part product will comply with the price controls at its current retail price.
However, such an amendment is condition upon:
(a)no further price increases in Homeline Part during the first compliance period of the new price controls (1 January 2006 to
30 June 2007); and(b)Homeline Part not being increased by more than the Consumer price index in the compliance periods after 30 June 2007.
Officers from the Department of Communications, Information Technology and the Arts will contact ACCC and Telstra officials early in January 2006 to discuss these amendments.
I have copied this letter to the Prime Minister, Deputy Prime Minister, Treasurer and the Minister for Finance and Administration.”[65]
[65] T documents at 73-74
M. Telstra’s further undertakings lodged on 23 December 2005
Following the announcement of the Government’s decision, Telstra lodged two further undertakings for the periods 1 January 2006 to 30 June 2007 and
1 July 2007 to 30 June 2008. They included a geographically averaged pricing construct with a single $30 price across all four ULLS bands.[66][66] Exhibit C at [35]
N.ACCC’s report to Minister
On 31 March 2006, the ACCC gave the Minister a report (ACCC report)[67] discussing:
(1)financial implications for Telstra and other industry players relating to the provision of the ULLS; and
(2)ACCC’s views about future policy options open to the government to address any issues that may arise as a result of Telstra’s having to meet line rental policy price parity obligations in the context of the averaged ULLS access charges.
[67] T documents 212-219
O.Minister submits ACCC’s report to Senior Ministers
On the basis of Ms Croke’s evidence, I find that the Minister provided a copy of the ACCC’s report to each of the Senior Ministers. She did so on 6 April 2006. On the same basis, I also find that the Cabinet Secretariat circulated the Minister’s letter to the Senior Ministers on 7 April 2006.
On the following day, 7 April 2006, the Cabinet Secretariat circulated an advice to the Senior Ministers and the Minister that the ACCC report would be considered at the Senior Members’ meeting schedule for 11 April 2006. The Senior Ministers did not, though, consider the ACCC’s report at their meeting on that day. The report remained as an item that might “… have been considered by the Cabinet or a Senior Ministers meeting during the term of the Howard Government” but was not.[68] As Ms Croke said in her first affidavit, it cannot now be considered by Cabinet for there is a long standing convention that, as a document of a former government, it is not available for consideration by the current government.[69]
[68] Exhibit 2 at [35] and Transcript at 30
[69] Exhibit 2 at [35]
P.ACCC’s decision on Telstra’s undertakings
In August 2006, the ACCC made its decision rejecting the undertakings Telstra had lodged on 23 December 2005. It did so after issuing a discussion paper in January 2006, considering the submissions received in response to it, commissioning its own external expert advice and issuing a draft decision in June 2006.[70] Telstra lodged an appeal against the ACCC’s decision.
Q.Telstra’s appeal to the Australian Competition Tribunal from the ACCC’s rejection of its undertakings
[70] Exhibit C at [35] and see Exhibit WDG 7
On hearing Telstra’s appeal from the ACCC’s rejection of its undertakings, the Australian Competition Tribunal (ACT) affirmed the ACCC’s decision.[71] As summarised by the ACT, the undertakings required it to consider,
[71] Exhibit C at [36] and see Telstra Corporation Ltd (No 3) [2007] ACompT 3, Goldberg J, President, Mr R Davey and Professor D Round
among others, the following issues:
“ ... whether it was reasonable, having regard to the matters specified in s 152AH and the objectives in s 152AB, for Telstra:
• to arrive at its $30 charge by averaging its costs of supplying the ULLS across four geographic areas throughout Australia, namely central business districts, metropolitan areas, provincial areas and rural areas;
• to rely on its PSTN Ingress and Egress II Model (‘PIE II model’) to estimate the network costs sought to be recovered by the $30 charge;
• to include the Network Modernisation Provisions; and
• to use two distinct values for its Weighted Average Cost of Capital (‘WACC’) in determining its costs of supplying the ULLS and, regardless of whether one or two WACC values were accepted, whether it was reasonable for Telstra to adjust the WACC by the addition of an amount equal to one standard deviation to allow for an alleged asymmetry in the social consequences of errors made in estimating the WACC.”[72]
[72] Summary to Telstra Corporation Ltd (No 3) [2007] ACompT 3 at [6]
After referring to ss 152BV(2)(d), 152AH and 152AB, the ACT concluded:
“… that it is not satisfied having regard to the matters set out in s 152AH and the objectives in s 152AB that:
• the charge for access to the ULLS of $30 per service per month in the undertakings, based on the averaging of its costs of supplying the ULLS across the four geographic areas, is reasonable;
• the Network Modernisation Provisions in the undertakings are reasonable;
• the PIE II model can be relied upon to estimate accurately Telstra’s costs of supplying the ULLS for the periods covered by the undertakings;
• Telstra’s estimated network costs represent a reasonable estimate of its projected network costs for the periods covered by the undertakings;
• Telstra’s allocation of its ULLS specific costs across ULLS lines only is reasonable with the consequence that the Tribunal is not satisfied that Telstra’s estimates of its ULLS specific costs are reasonable;
• the use by Telstra of two values for the WACC in determining its cost of supplying the ULLS is reasonable;
• the calculation and estimate of the WACC by the addition of an amount equal to one standard deviation in order to allow for the alleged asymmetry and the social consequences of errors made in estimating the WACC, for the purpose of determining and estimating Telstra’s specific ULLS costs, is reasonable.”[73]
[73] Summary to Telstra Corporation Ltd (No 3) [2007] ACompT 3 at [8]
Mr Samuel released a News Release following the publication of the ACT’s decision. After summarising the outcome, it read in part:
“‘This decision is fundamental to Telstra’s current broadband FTTN [fibre to the node] proposal,’ ACCC Chairman, Mr Graeme Samuel, said. ‘An FTTN network brings fibre closer to the customer, but continues to use part of the legacy copper network. The substantive area of disagreement on costs under Telstra’s proposal has been over the remaining copper, not fibre.
‘Telstra’s copper cost proposal has now been found to be not reasonable by the Tribunal. This makes the need for Telstra to release its FTTN costing for public examination even more pressing.’”[74]
[74] Exhibit C at [38] and Exhibit WDG 8
During the course of the hearing, Goldberg J ruled on a claim by the Commonwealth that certain documents referred to in Telstra’s Notice of Application should not be provided to or inspected by the parties on the grounds of public interest immunity. The documents were the “… ACCC’s presentation to … [IDC] formed to consider Telstra’s Request for a Ministerial Pricing Determination for Averaged ULLS Prices”, the “Draft IDC report to cabinet on ULLS retail parity”, the IDC report including DOFA’s minority report and the ACCC’s “Report to Government on ULLS Pricing and Retail Price Parity.”[75]
[75] Telstra Corporation Ltd (No 2) [2006] ACompT 10
After referring to the authorities and to the evidence of Ms Holthuyzen and Ms Goddard, to which I have also been referred, his Honour said that he did not consider the ACCC’s presentation to the IDC to be subject to public interest immunity. It had not been prepared for submission to a Minister, Cabinet or a Cabinet committee. Instead:
“… It was prepared to inform interdepartmental officers to enable them to brief Ministers on a current policy issue. It may that it was an input document to subsequent documents which were prepared for submission to Ministers but that fact alone does not qualify it for protection from disclosure. I do not accept that its disclosure contains a significant risk of disclosing the contents of the documents otherwise entitled to protection from disclosure. I do not consider that it falls within any category of Cabinet or high level government document hitherto protected from production on the ground of public interest immunity.”[76]
[76] [2006] ACompT 10 at [36]
Goldberg J described the other three documents as falling within a different category. Although one was marked “Cabinet-in-Confidence”, he found that none was intended for submission to Cabinet or a Cabinet committee. In doing so, he said:
“… Although Ms Holthuyzen says the documents are analogous to a Cabinet document they do not fall into the recognised high level of Cabinet documents being documents submitted to Cabinet for its consideration and deliberation.
In its final form it was provided to a meeting of Senior Ministers, including the Prime Minister, which did not comprise a Cabinet Committee as such. Ms Goddard describes the group of Senior Ministers but acknowledges that it is not constituted a formal committee of Cabinet. She expresses the view that the public interest which attaches to the preservation of the confidentiality of Senior Ministers is identical to the public interest which attaches to the preservation of the confidentiality of meetings of Cabinet committees. However, the principle of collective responsibility which underpins the protection given to Cabinet deliberations does not apply necessarily to meetings of Ministers, whether Senior Ministers or otherwise.”[77]
[77] [2006] ACompT 10 at [37]-[38]
His Honour referred to the principles set out in the judgments of
ACJ and Stephen J in Sankey v Whitlam.[78] I have referred below to the same principles expressed in the judgment of Mason J.[79] Goldberg J also referred to the judgment of the Full Court of the Federal Court in Commonwealth v Construction, Forestry, Mining and Energy Union[80] and I also return to this below. He concluded:[78] (1978) 142 CLR 1
[79] See [87]-[88] below. Aickin J was also in agreement but Jacobs J confined himself to a much narrower issue and did not address the principles.
[80] (2000) 98 FCR 31, Black CJ, Tamberling and Sundberg JJ
Gibbs“ Although it is arguable that the principle of public interest immunity extends to documents prepared by government departments for submission to Ministers as well as for submission to Cabinet, there is no doubt that such protection is not absolute but must be balanced against the interests of justice. …
The circumstances in this case are unusual and give rise to issues quite different from the issues faced in the earlier cases which have considered the application of public interest immunity. In those cases a party sought to have produced before a court, by way of either discovery or subpoena, a document which was not available to the party who was seeking to advance its case.
In the present case, the relevant documents in respect of which public interest immunity is claimed, have been in the possession of the Commission and have been examined by it in the course of making its decision to reject the access undertakings given by Telstra. In short, the documents are part of the documents which have informed the decision which is under review. Those documents, in the ordinary course, should form part of the material to be placed before the Tribunal on its review of the Commission’s decision:
s 152CF(4) and s 152CGA(2). If the immunity is granted and the review before the Tribunal proceeds, then the position will be that the Commission will have access to, and knowledge of, documents, which it examined in the course of reaching its decision, which will not be available to Telstra, or indeed, to any of the other intervenors. Accordingly, the requirements of
s 152CF(4) will not be satisfied.The documents contain material and information on a critical issue to be determined in the review, namely whether Telstra’s ULLS price should be averaged or de-averaged. In the absence of access to, and knowledge of, the contents of these four documents, Telstra will be unable to determine whether the submissions made and the material to be relied upon by the Commission are consistent with, or countered by, material contained in those documents. Telstra will not have available to it material to which the Tribunal can have regard in accordance with s 152CF(4).
…
I have reached the conclusion that the documents are of such importance and relevance to the review before the Tribunal (particularly having regard to the fact that the Commission has access to them) that any detriment to the public interest involved in disclosure to the parties and intervenors to the review in the limited manner I propose to direct is outweighed by the public interest in the advancement of justice and the carrying out of the review process required by Pt XIC of the Act, bearing in mind the extent of the record which was before the Commission and is to be placed before the Tribunal in accordance with ss 152CF(4) and 152CGA of the Act.’[81]
[81] [2006] ACompT 10 at [42]-[44] and [49]
R.Telstra’s 2008 ULLS undertaking
On the basis of Mr Gallagher’s affidavit, I find that, on 3 March 2008, Telstra lodged a new undertaking in relation to the pricing of the ULLS. The undertaking is limited to Band 2, which is one of the four geographic bands or areas in Australia. Its undertaking is supported by a new cost model called the Telstra Efficient Access model (TEA model) and was intended to operate until 2010.[82] The ACCC published its draft decision regarding the undertaking on 13 November 2008.[83]
[82] Exhibit C at [39]
[83] Transcript at 53-54
S. Review of the Universal Service Obligation
On the basis of the speeches by Senator Stephen Conroy and Senator Helen Coonan annexed to Mr Gallagher’s affidavit,[84] I accept that there is bipartisan political acceptance that the USO must be properly funded and that the level of its funding should be reviewed to ensure that this is so. The previous government commenced that review on 27 June 2007 to consider whether the cost of the USO is shared equitably within the telecommunications industry. On 15 August 2007, the Department issued an issues paper calling for public comment by 1 November 2007.[85] Telstra responded to it.[86]
[84] Exhibit C at WDG9 and WDG10
[85] “Telecommunications Universal Service Obligation (USO) Review Issues Paper”: Exhibit C at WDG12
[86] Exhibit C at WDG13
The now Minister for Broadband, Communications and the Digital Economy (BCDE Minister) in the current government set the level of funding on
24 November 2008 but did so at its previous level.[87] In Telstra’s view, the consequence is that the USO remains underfunded.[87] Transcript at 54
T. National Broadband Network
On the basis of Mr Gallagher’s affidavit, I find that the Commonwealth Government has committed $4.7 billion in funding to develop a high-speed, fibre based broadband network to 98% of the Australian population. On 11 April 2008, the Commonwealth requested proposals to roll out and operate the national broadband network (NBN).[88]
[88] Exhibit C at [44] and WDG15 and WDG16
Together with others, Telstra qualified as a proponent for the NBN and submitted a proposal. On 15 December 2008, the BCDE Minister announced that he would not consider Telstra’s proposal for the NBN further as he had reached the conclusion that it did not meet the mandatory conditions.[89]
[89] Transcript at 54-55
CONSIDERATION: section 34(1)(a)
In this section, I will include a consideration of the concepts of executive and collective responsibility and of public interest immunity for they are at the heart of the considerations that informed the policy underpinning a section such as s 34 of the FOI Act. Concepts of executive and collective responsibility may, perhaps, throw some light on what comprises “Cabinet”, to which s 34 refers.
A.Identifying documents coming within the scope of s 34
The exemption claimed relies on s 34(1)(a) alone but I will set out the subsection in full as it provides its context:
“A document is an exempt document if it is:
(a)a document that has been submitted to the Cabinet for its consideration or is proposed by a Minister to be so submitted, being a document that was brought into existence for the purpose of submission for consideration by the Cabinet;
(b)an official record of the Cabinet;
(c)a document that is a copy of, or a part of, or contains an extract from, a document referred to in paragraph (a) or (b); or
(d)a document the disclosure of which would involve the disclosure of any deliberation or decision of the Cabinet, other than a document by which a decision of the Cabinet was officially published.”
Section 34(6) provides:
“A reference in this section to the Cabinet shall be read as including a reference to a committee of the Cabinet.”
Looking only to s 34(1)(a), a document may be exempt if it comes within one or other of two categories. The characteristics of each category are:
| Category 1: submitted to Cabinet | Category 2: proposed to be submitted | |
| 1. | Document brought into existence for purpose of submission for consideration by Cabinet. | Document brought into existence for purpose of submission for consideration by Cabinet. |
| 2. | Document submitted to Cabinet for its consideration. | Document proposed by Minister to be submitted to Cabinet for its consideration. |
B.The purpose characteristic
Common to each category is the purpose characteristic. That characteristic will only exist if four criteria are met. I will set them out before considering each in further detail:
1.The first focuses on the document.
(1)The document, to which access is requested, must be a document that was brought into existence for the stated purpose i.e. for the purpose, and so with the “object or aim …”[90], of submitting that document for consideration by the Cabinet.
[90] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
(a)Mere submission of a document to Cabinet for its consideration is insufficient to meet this criterion if it was not brought into existence for the purpose of being so submitted.
(2)A distinction must be drawn between the document itself that is brought into existence for the stated purpose and documents prepared, for example, “for the purpose of providing raw material which might be used in the preparation of another document that was to be submitted by the ERC [Expenditure Review Committee]”[91] but never for the purpose of being seen, let alone considered, by Cabinet.
[91] Secretary to the Department of Infrastructure v Asher [2007] VSCA 272 at 3 per Buchanan JA and see also Vincent JA at [37]-[40] and Redlich JA at [55] considering s 28(1)(b) of the Freedom of Information Act 1982 (Vic): “A document is an exempt document if it is - … (b) a document that has been prepared by a Minister or on his or her behalf or by an agency for the purpose of submission for consideration by the Cabinet; …”.
(2)The document need not be a document prepared by an officer of a Department or agency.[92]
[92] Morris J, found a document prepared by a consultant in response to a request by the Victorian Cabinet to be a document prepared for the purpose of submission for consideration by the Cabinet: Re Smith and Department of Sustainability and Environment [2006] VCAT 1228; (2006) 25 VAR 65 at [16]; 68
2.The second focuses on the submission of the document to Cabinet.
(1)The word “submission” in this context means “an act of submitting”.[93] To “submit” means “… to offer, suggest or present (eg a proposal) for formal consideration by others …”.[94]
[93] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
[94] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers This meaning is consistent with those to which I referred in Re Toomer and Department of Agriculture, Fisheries and Forestry and Ors [2003] AATA 1301 at [66]-[67]
(2)The criterion requires either that the document “has been submitted” or is “proposed by a Minister to be so submitted”:
(a)in this context, the word “submit” means “to present … for formal consideration by others … to hand in …”;[95]
(b)it is not enough that an officer proposes that a document be submitted to Cabinet; the Minister must do so;
3. The third focuses on “consideration” by Cabinet.
(1)Among the meanings of the word “consideration” is that of “careful thought”.[96]
(2)In so far as s 34(1)(a) requires that the document be submitted to Cabinet for its consideration, all that is required is that it be submitted for that purpose. There is no requirement that Cabinet actually consider it.
4.The fourth focuses on submission to, or proposed submission to, “Cabinet”.
[95] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
[96] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
C. Executive power and legislative power: achieving responsible government
No reference is made to the Cabinet in The Constitution (Constitution). Chapter 2 of the Constitution provides for the Executive Government of the Commonwealth. It vests the executive power of the Commonwealth in the Queen but provides that it is exercisable by the Governor-General as the Queen’s representative.[97] A Federal Executive Council (FEC) advises the Governor-General in the government of the Commonwealth.[98] Its members are chosen and summoned by the Governor-General and sworn as Executive Councillors.[99] The Governor-General acts with the advice of the FEC or, as the High Court said in Lange v Australian Broadcasting Corporation[100] citing Theodore v Duncan,[101] “‘on the initiative and advice’ of ministers”. The Governor-General may appoint members of the FEC to administer such Departments of State as the Governor-General in Council establishes.[102] After the first general election, no Minister of State could hold office for a longer period than three months unless a senator or a member of the House of Representatives.[103]
[97] Constitution, s 61
[98] Constitution, s 62
[99] Constitution, s 62
[100] (1997) 189 CLR 520; 145 ALR 96 at 558; 105
[101] [1919] AC 696 at 706
[102] Constitution, s 64
[103] Constitution, s 64
The conferral of the executive power in this way is counterbalanced by the conferral of the legislative power on the Federal Parliament, consisting of the Queen, a Senate and a House of Representatives,[104] and the conferral of the judicial power on the High Court and on such other courts as Parliament creates.[105] The way in which that balance is maintained was considered by the High Court in The Queen v Kirby; Ex parte Boilermakers’ Society of Australia:[106]
“ Probably the most striking achievement of the framers of the Australian instrument of government was the successful combination of the British system of parliamentary government containing an executive responsible to the legislature with American federalism. This meant that the distinction was perceived between the essential federal conception of a legal distribution of governmental powers among the parts of the system … namely the structure or composition of the legislative and executive arms of government and their mutual relations. …”[107]
[104] Constitution, s 1
[105] Constitution, s 71
[106] (1956) 94 CLR 254
[107] (1956) 94 CLR 254 at 275 per Dixon CJ, McTiernan, Fullagar and Kitto JJ
Much more recently, the way in which the framers of the Constitution achieved the balance was considered by French CJ in Ruddock v Vadarlis:[108]
“[176] … Section 61 is the primary source of executive power. Its content extends to the execution and maintenance of the Constitution and the laws of the Commonwealth. It is also limited by those terms in so far as it will not authorise the Commonwealth to act inconsistently with the distribution of powers and the limits on power for which the Constitution provides. Nor will it authorise the Commonwealth to act otherwise than according to the laws of the Commonwealth. Other provisions of the Constitution vesting powers in the Governor-General may be seen as distinct sources of executive power on their specific topics and as giving content to the power conferred by s 61.”[109]
[108] (2001) 183 ALR 1 (Tampa Case)
[109] (2001) 183 ALR 1 at 47 per French CJ, with whom Beaumont J generally agreed with Black CJ dissenting
The way in which the executive is responsible to the legislative arm of government, and so the manner in which responsible government is achieved, had been explored earlier in Lange v Australian Broadcasting Corporation.[110] The High Court had regard to matters such as these and also to other provisions of the Constitution in concluding:
“ The requirement that the parliament meet at least annually, the provision for control of supply by the legislature, the requirement that Ministers be members of the legislature, the privilege of freedom of speech in debate, and the power to coerce the provision of information provide the means for enforcing the responsibility of the Executive to the organs of representative government. In his Notes on Australian Federation: Its Nature and Probable Effects, … Sir Samuel Griffith pointed out that the effect of responsible government ‘is that the actual government of the State is conducted by officers who enjoy the confidence of the people’. That confidence is ultimately expressed or denied by the operation of the electoral process, and the attitudes of electors to the conduct of the Executive may be a significant determinant of the contemporary practice of responsible government….”[111]
[110] (1997) 189 CLR 520; 145 ALR 96
[111] (1997) 189 CLR 520; 145 ALR 96 at 559; 105-106 (citations omitted)
D. Changing elements of responsible government
The FEC is one body but Cabinet is another. The emergence of Cabinet as an element of responsible government in England was traced by the Full Court of the Federal Court in Commonwealth of Australia v Northern Land Council.[112] The notion of Cabinet Ministers’ having collective responsibility for its decisions did not walk hand in hand with the development of Cabinet itself. It came somewhat later to accommodate changes in the political landscape as the Full Court explained:
“ The concept of collective responsibility did not really emerge as an element of Cabinet government until the mid-19th century. P G Walker in The Cabinet (1970), p 30 observed that in the time of King George III ministers sometimes spoke and even voted against policies determined by the Cabinet. The trend to solidarity seems to have developed as an incident of the two-party system in England (pp 30-31):
‘As the two-party system began to arise so the feeling grew that such behaviour was improper. With the full establishment of the mass two-party system the doctrine of collective responsibility passed into the unwritten conventions of the Constitution – something that everyone took for granted. The doctrine was indeed necessary to the Cabinet from the mid-nineteenth century onwards. Cabinet Ministers were party leaders: both their leadership and the party itself would be weakened if the leaders openly attacked one another or publicly attributed views to one another.’
The need for party unity and a broader public interest basis for collective responsibility was suggested by J P Mackintosh in The British Cabinet (1968), p 520-521. There was, he said, a feeling that those working together to guide national affairs ought either to be in sufficient agreement to give genuine efficacy to collective decisions, despite differences at the formative stage, or should resign. The doctrine, of course, lies in the field of convention and conventions on one view are no more than generally accepted political practices with a record of successful application or precedent. They are: ‘… extra-legal rules of structure or procedure or principle, established by precedent, consolidated by usage and generally observed by all concerned.’ … Depending upon circumstances and political exigency conventions are not always applied. And they may change over time. The convention of collective responsibility has attracted an extensive literature and there are many cases cited of its application, but also cases of its waiver. …”[113]
[112] (1991) 30 FCR 1 at 16-17 per Black CJ, Gummow and French JJ
[113] (1991) 30 FCR 1 at 16-18
The discussion by Callinan and Heydon JJ of the seventh ground needs to be read with their observations regarding their third ground. It would seem to be consistent with other observations they made earlier in their judgment regarding the opinion evidence given by Mr Dennis Rose, who has formerly been Secretary of the Attorney-General’s Department and President of the Australian Law Reform Commission, and Professor Peter Dixon, who is an applied economist. Mr Rose had expressed an opinion that disclosure of documents that were provisional in nature or that were superseded would make a very useful contribution to the public debate. Callinan and Heydon JJ said:
“… Contrary to Mr Rose’s opinion that the exposure of these would make ‘a very useful contribution to the public debate’, in our opinion documents of that kind are more likely to mislead or confuse, or to make no contribution to any useful, or currently relevant debate.
Some of Professor Dixon’s evidence made the point, incontestable we think, that the topics were of public interest, as to the way in which, for example, ‘bracket creep’ adversely affected many taxpayers. But a distinction that he too did not make in his evidence was the distinction between provisional or superseded documents, and current ones. The former could do little to advance the analyses which Professor Dixon and other economists would wish to do, of ‘the Treasury’s apparent concern with the number of people who move from one tax bracket to another in any given year’.”[260]
[260] (2006) 228 CLR 423; 229 ALR 187; 91 ALD 516 at 465; 219; 548 [116]-[117]
Hayne J also appears to support the proposition that there could, on the evidence in that case, be a public interest in refusing disclosure of documents in
circumstances where they would be likely to mislead. He said:
“… In the case of those particular documents, the relevant grounds for the claim were grounds asserting that release of the material shown in the documents had ‘the potential to lead to confusion and to mislead the public’. The appellant did not assert that this could not constitute a reasonable ground for the claim that had been made.”[261]
[261] (2006) 228 CLR 423; 229 ALR 187; 91 ALD 516 at 448; 206; 535 [70]
D.3The public interest identified by Telstra
In his affidavit, Mr Gallagher stated that he had not seen the documents but based his views on the assumption that they would express views on the following matters:
“48.1 the appropriateness of the regulation of Telstra’s Public Switched Telephone Network originating and terminating access and ULLS services;
48.2the merits of averaged versus de-averaged ULLS pricing constructs; this is likely to include views on Telstra’s costs of supplying ULLS across the four geographic bands;
48.3the impact of the ACCC’s de-averaged pricing structure for ULLS on Telstra; this is very likely to include views on whether Telstra is recovering its costs of ULLS; it is also likely to include views on whether the current USO regime is under-funded, and the degree of any under-funding, given the central nature of that issue to the impact of ULLS pricing on Telstra;
48.4the impact of an averaged pricing structure for ULLS on Telstra’s competitors and on competition, particularly in rural areas;
48.5the impact of the Commonwealth’s retail pricing parity policy on the ACCC’s wholesale ULLS pricing decisions;
48.6whether the ACCC’s approach to ULLS pricing sufficiently takes into account Telstra’s capacity to maintain average retail prices consistent with the Commonwealth’s policy on retail pricing parity;
48.7how the ACCC will ensure that its ULLS pricing decisions will enable the maintenance of retail pricing parity and will not place an unreasonable burden on any industry player, specifically Telstra’s ability to continue to maintain the implicit cross-subsidy between metropolitan and regional services and thereby continue to fund the USO, if indeed the USO is under-funded;
48.8whether there is any adverse impact on Telstra’s ability to deliver on the Commonwealth’s commitment to retail price parity for Australians and whether there are strategies to address any problems identified; and
48.9the ACCC’s views about future policy options open to the Commonwealth to address any issues that may arise as a result of Telstra having to meet line rental price parity obligations in the context of de-averaged ULLS access charges; this is likely to include consideration of alternative means of funding the USO regime.”[262]
[262] Exhibit C at [48]
Mr Gallagher then addressed five grounds explaining the continuing relevance of the documents under four headings being their relevance to:
(1)Telstra’s 2008 ULLS undertaking and future ULL undertakings;
(2)the NBN;
(3)the USO review; and
(4)the adequacy of the Commonwealth’s public disclosure in the T3 process.
In the submissions made on its behalf by Mr Hanks and Mr Pizer, Telstra also relied on the public interest in:
(1)ensuring that the telecommunications industry is regulated fairly and appropriately;
(2)ensuring that any access regime imposed on a private entity is properly funded and is sustainable;[263] and
(3)having a fully informed public debate on the issues.
[263] Referring to Mr Gallagher’s affidavit, Exhibit C at [53]
D.4The Department’s response
The written submissions made on behalf of the Department submitted that there is no evidence that, if access were to be granted, the documents would receive a circulation beyond Telstra. Were the documents to be requested by a person other than Telstra, it is likely that a great deal of the information relating to Telstra’s business affairs would be found to be exempt. Telstra itself has not sought access to business information which relates to others and which would be exempt under s 43 of the FOI Act. Therefore, it cannot be said that the documents could be used as part of a public consultation process in relation to ULLS undertakings for they will not become available to members of the public. An argument that the documents will be relevant on appeal before the ACT omits the fact that the ACT granted Telstra access to similar documents. There is no reason to suppose that the ACT would not make a similar order in a future case. The Department extended its submissions to Telstra’s claim that the documents are relevant to the Universal Service Obligation.
As to the NBN, it was submitted that the interests relied upon are pre-eminently the private interests of those responding to the request for proposals for an NBN. Furthermore, there was no evidence that Telstra would circulate the documents to others. Were the documents to have any relevance to the process regarding the NBN, it would be contrary to the public interest if Telstra, as an entity wishing to engage in that process, were to gain an advantage by having the documents when others do not. That factor alone precludes the characterisation of the release of the documents as being in the public interest.
If the documents are said to be relevant to the adequacy of the Commonwealth’s public disclosure in the T3 process, it was submitted that there is no evidence that Telstra would ever publicly release business information that is included in the documents and that relates to it. Such release would be required to enable the public to evaluate the adequacy of the Commonwealth’s public disclosure in the T3 process.
The Joint Media Release issued by the Minister and the Minister for Finance and Administration regarding the topics referred to the ACCC for investigation was said to say nothing about the public interest in disclosing the documents. At best, it was submitted, the Joint Media Release “… might at best indicate that there was thought to be some interest by the public in the retail price parity issue in general”.[264]
[264] Submissions dated 30 January 2009 at [61]
If I were to find, as I have, that the Senior Ministers’ group were not a committee of Cabinet, it was submitted that it could could be inferred that their deliberations attracted obligations of collective responsibility similar to those attracted by Cabinet meetings. The basis for the submission was that the meeting was a meeting of the most senior Ministers in the government of the day. Matters of the utmost sensitivity were discussed at that meeting and decisions that would otherwise have been taken by Cabinet were made at it.
E.General consideration of the submissions
It seems to me that it is not helpful to think about whether or not access is contrary to the public interest in terms of the use that Telstra will or may make of them. Access under the FOI Act is, by its nature, to the world at large. It is apparent from s 11(2) of the FOI Act that a person’s right of access is not affected by the person’s reasons for seeking access. That does not mean that the identity of the person requesting access is irrelevant. It is relevant in so far as information about a person’s business affairs or personal affairs will be disclosed if the person making the request is that person. The right of access is not qualified or extended by that for the right is expressed in s 11(1) to be subject to the FOI Act itself. Therefore, if access is to be granted to Telstra, it will be given information about its business affairs, if any, in the documents. It will not be given access to information that relates to the business affairs of others, if any, if that exemption comes within the exemption in s 43 of the FOI Act. If Optus were to have made the request, it would not be given access to Telstra’s business information in so far as it comes within s 43 but would be given access to its own.
Once it is realised that a person’s reasons for seeking access do not affect the right of access given under the FOI Act, thoughts of whether access will give the person an unfair advantage over another become as irrelevant as thoughts of how the person requesting access will use the documents. For this reason, I cannot accept the submission made on behalf of the Department:
“… that it would be contrary to the public interest within s 36(1)(b) for certain information to be available only to one participant in the National Broadband Network process (the Applicant). … The use that the Applicant could or might make of the documents is relevant to this argument. That argument does not impugn the Applicant’s reasons for seeking access, but rather addresses a consequence of granting access to this particular Applicant in circumstances where the Applicant seeks the documents (at least in part, according to Mr Gallagher’s affidavit) because they are relevant to an unfinished competitive process. This argument therefore is not precluded by s 11(2).”[265]
[265] Submissions dated 16 March 2009 at [28], footnote omitted
There is nothing to say that the information would be available only to one participant. Subject only to the qualification regarding business and personal affairs, if it is accessible at all under the FOI Act, it is accessible by whosoever cares to request it and to pay any relevant fees and charges. Given that all or any participants in the unfinished competitive process have a right to seek access under the FOI Act and all requests must be considered in the same legislative framework,
I do not accept that any one would be given an advantage over another by the mere fact of being given access. The fact that one chooses to make a request and others do not may give that participant an advantage but it is an advantage of its own making and, possibly, a very short term advantage. It is an advantage brought about by its choosing to make a request. Any disadvantage to others is brought about by their not taking the same path but it is a disadvantage that they may easily rectify by making a request. In view of this, the fact that one participant in a competitive process may see certain documents as a result of a request under the FOI Act cannot be a relevant factor in this case in deciding what is contrary to the public interest.
Both parties accept, as do I, that there is a public interest in an informed debate about the regulation of the telecommunications industry. I would also accept the more general statement of Telstra that there is a public interest in ensuring that the telecommunications industry is regulated fairly and appropriately. That finding has nothing to do with the fact that the Australian community continues to be the majority shareholder in Telstra. It has everything to do with the vital importance of an adequate telecommunications system, including a National Broadband Network, in Australia howsoever and whosoever provides it. Whether regard is had to the conduct of business, the defence and security of the country, the conduct of its local, State and Commonwealth governments, its educational facilities, its emergency services, its community activities and the way in which its inhabitants manage their personal and financial affairs and maintain their family and social interaction, a telecommunications system that meets Australia’s current and future and expanding needs is vital.
The Department resisted Telstra’s submission that there is a public interest in ensuring that any access regime imposed on a private entity is properly funded and is sustainable. It argues that this goes beyond fairness and appropriateness of regulation to a matter of private interest. At one level it could be said to do so. The price set for access to the ULLS no doubt affects the commercial interests of Telstra. Given the unique historical position of Telstra in the Australian telecommunications industry, I find that it must be affected as it owns the infrastructure. There is, however, a broader question and it extends beyond the particular and immediate effect upon Telstra. The fairness and appropriateness of maintaining a particular price for access to the ULLS is relevant in assessing its sustainability. Therefore, it is relevant in assessing the sustainability of other users’ access to the ULLS and so relevant to the Australian community’s access to the telecommunications system.
True it is that there is no evidence in the material pointing to any public debate concerning the methodology underpinning Telstra’s access prices for the ULLS. The existence of a public debate on a particular matter may be relevant in underlining that the matter is of public interest but, in some circumstances, it may simply show that a matter is of interest to the public but nothing more. Equally, the absence of a public debate does not demonstrate that a matter is not in the public interest. A lack of overt interest by the public at any particular time cannot determine that the matter is not a matter of public interest. If it were otherwise, it would be difficult to argue that notions of Cabinet confidentiality underpinning the exemption in s 34 of the FOI Act had their foundation in the public interest in maintaining a system of responsible government. Neither Cabinet confidentiality nor responsible government is a subject that garners much debate amongst the general public.
F.Documents 2, 3 and 5 and 4A and 6
I have not differentiated the documents for I have found that documents 4A and 6 are not Cabinet documents. Once that potential difference falls away, there are no others. All have been prepared either for a Minister, as in the case of documents 2, 3 and 4A, or for a group of Ministers, as in the case of documents
5 and 6. No claim has been made that access to the documents would be contrary to the public interest on the basis of grounds two to seven considered by Callinan and Heydon JJ in McKinnon.
I have decided that the Senior Ministers’ group is not a committee of Cabinet. It may be that the Senior Ministers adopted a protocol of joint responsibility akin to that adopted by Cabinet itself. There is evidence that this was so in the reference to “Government” in the Joint Media Release. It suggested that the decision made on 19 December 2005 was a decision of the government made in accordance with procedures approved by the Prime Minister. Normally, that might be expected to be Cabinet or a committee of Cabinet but, in this instance, it was made by the Senior Ministers’ group. That was the Prime Minister’s prerogative.
I find that, understandably, the Cabinet Secretariat dealt with the Senior Ministers’ group as it did with Cabinet and its committees. It cannot be inferred from the seniority of its members or from the fact that it dealt with the more serious or complex matters that the documents to which it had regard should automatically attract a presumption that their secrecy must be maintained in the same way as Cabinet secrecy is maintained. To do that would be to ignore the fact that its documents do not come within s 34 of the FOI Act. It would also be to ignore that
s 36(1)(b) requires a balancing exercise to be undertaken and the source of the documents or the use that has been made of them by the Senior Ministers’ group is only one matter to be placed in the balance.
The ACT found that it was arguable that the principle of public interest immunity extended to documents prepared by government departments for submission to the Senior Ministers group. It went on to weigh the two public interests at stake: the public interest that harm shall not be done to the nation or the public service by disclosure of certain documents and the public interest that the administration of justice shall not be frustrated by the withholding of documents.
It decided that the latter outweighed the former in the circumstances. Not to disclose would frustrate the administration of justice in that Telstra would be at a critical disadvantage regarding a major issue were it not to be given access. The ACCC, whose determination was under review and it and the Commonwealth which were represented in the proceedings, would have access to it. Considerations regarding the administration of justice did not weigh so heavily that the ACCC report was disclosed to the public generally.
The fact that this was the conclusion reached by the ACT cannot determine the way in which I decide whether disclosure of the ACCC report would be contrary to the public interest. The circumstances and matters to which I must have regard are not limited to the two that determine whether a document is subject to public interest immunity. Quite apart from the matters I have identified as being relevant to the public interest in the previous section of these reasons, there is the underpinning philosophy of the FOI Act that the right of the Australian community to access to information in the possession of the Commonwealth be extended as far as possible.
While it is true that the contents of the ACCC report have not been made public, the Senior Ministers did not choose to keep secret their request for it nor their deliberations to that point. In the Joint Media Release issued on 19 December 2005, the results of their deliberations to that point were revealed. It announced that the government had been considering retail pricing parity and the setting by the ACCC of wholesale access prices for the ULL. This was followed by announcement of the decision to make explicit Telstra’s retail pricing parity obligations and its consequential decision to seek further information from the ACCC about the impact of the policy on its wholesale ULL pricing decisions before determining whether any further action was required to ensure Telstra is able to fulfil its pricing parity requirements. The Government also made public that, while the ACCC was finalising a decision whether to accept or reject its undertaking for ULL prices, Telstra had separately sought the Government’s intervention to direct the ACCC on how ULL prices should be determined.
When I have regard to the public interest in telecommunications that
I set out in section E. above together with the nature of the right of access created by the FOI Act, it seems to me that the balance lies in favour of disclosure. The Government itself put its request for the ACCC report and the subjects it was to address squarely in the public arena. That report later took a central role in the proceedings before the ACT when it reviewed the ACCC’s determination. Goldberg J found that it contained material and information on a critical issue to be determined on the review i.e. whether Telstra’s ULLS price should be averaged or de-averaged. The ACT’s decision affirming the ACCC’s determination is in the public arena. The ACCC’s report was never considered by the Senior Ministers’ group or by Cabinet. To disclose it would not be to disclose matters considered by Senior Ministers. It may be to disclose the topics on which the Senior Ministers’ group sought the report but the government had already done that itself through the Joint Media Release. The opportunity for the Senior Ministers’ group to consider the ACCC report has passed but the knowledge that it was requested and the central role it played in the ACT consideration remains. Disclosure at this stage is relevant in informing public debate on the maintenance of an effective system of telecommunications in Australia. Its disclosure is consistent with the public interest in the administration of justice. An integral part of that public interest is the transparency of proceedings. The ACT’s consideration of whether the doctrine of public interest immunity applied to the ACCC’s report did not need to consider that wider aspect and could focus on whether or not lack of disclosure would frustrate the proceedings. I do need to consider it as one of the circumstances or matters pertaining to whether or not disclosure would be contrary to the public interest.
For these reasons, I do not consider that access to the documents under the FOI Act would be contrary to the public interest. Therefore, I:
2.vary the decision of the respondent dated 1 February 2007 by:
(1)setting aside that part of the decision that decided that parts of the documents entitled:
(a)Australian Competition and Consumer Commission – Report to the Government on ULLS Pricing and Retail Price Parity – March 2006 (ACCC Report) (Document 6); and
(b)Status Report on Issues Relating to the ACCC’s Report to Government on ULLS Pricing and Retail Price Parity (ACCC Draft Report) (Document 5);
were exempt under the Freedom of Information Act 1982; and
(2)substituting for that part of the decision a decision that the ACCC Report and the ACCC Draft Report are not exempt under the Freedom of Information Act 1982;
2.vary the decision of the respondent dated 2 May 2007 by:
(1)setting aside that part of the decision that decided that:
(a)a draft of an Inter Department Committee report entitled “Assessment of Telstra’s Proposal to Require Unbundled Local Loop Prices to be Averaged” (draft IDC Report) (Document 2);
(b)a draft Department of Finance and Administration Report being Appendix A to the draft IDC Report (draft DOFA Report) (Document 3); and
(c)the Final Department of Finance and Administration Report being Appendix A to the Final IDC Report (Final DOFA Report) (Document 4A);
were exempt under the Freedom of Information Act 1982; and
(2)substituting for that part of the decision a decision that the draft IDC Report, draft DOFA Report and Final DOFA Report are not exempt under the Freedom of Information Act 1982.
I certify that the preceding two hundred and thirty eight paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Kate Conners Associate
Date of Hearing 15 December 2008
Date of Final Submissions 20 March 2009
Date of Decision 15 February 2010
Counsel for the Applicant Mr Peter Hanks, QC with Mr Jason Pizer
Solicitor for the Applicant Mr Mick Batskos
FOI Solutions
Counsel for the Respondent Ms Debbie Mortimer SC with Mr Graeme Hill
Solicitor for the Respondent Mr Justin Hyland
Australian Government Solicitor
“Subject to this Part [Part V], the Archives must cause the record to be made available for public access.”: Archives Act, s 31(1). The record to which reference is made is a record that is in the open access period, is in the care of Archives or the custody of a Commonwealth institution and is not an exempt record: Archives Act, s 31(1A). Exempt records are specified in Archives Act, s 33.
Constitutional and Administrative Law, 4th edition, Sweet & Maxwell Ltd, London, 1967 at 295-297. See also Textbook on Constitutional and Administrative Law, Brian Thompson, Blackstone Press Limited, London, 1993 at 116-117. Changes in the exercise of executive power also occurred in Australia during World War II. In 1940 Mr Robert Menzies retained government with the support of two independents. He asked the then Labor Opposition Leader, Mr John Curtin, to join a national government. Mr Curtin declined but suggested a War Council comprising members of the government and the opposition. Mr Menzies agreed and the Advisory War Council chaired by Mr Menzies and including members of the War Cabinet, Mr Curtin and three members of the Opposition, was formed. It met for the first time in October 1940 and was maintained with the same broad membership when
Mr Curtin became Prime Minister in 1941.
Dawson, Toohey, Gaudron, Mchugh, Gummow and Kirby JJ
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