Coalition Senators' Additional Comments
Coalition Senators participating in the inquiry have serious
concerns about the impact of the Do Not Call Legislation Amendment Bill 2009 on
businesses, particularly on compliance costs and legitimate business-to-business
activities.
The Department of Broadband, Communications and the Digital
Economy could not provide critical data by which to assess any demand for
extending the Register, and the impact of the extension on business.[1]
Coalition Senators question the Government's claim that the
Bill will 'benefit those organisations that currently experience losses in
productivity'[2]
through unsolicited marketing calls or faxes.
Coalition Senators note that submissions to this inquiry
from businesses and industry associations oppose the bill on the basis that
the:
Extension
of the do not call to business and government will strike at the very heart of
commerce and put significant limitations on it.[3]
Stakeholder consultation – who
wants the Bill and why?
Coalition Senators were further troubled by the apparent
lack of current and representative consultation conducted by the Department:
The
Department has based its answers on research and consultation with Australian
consumers and industry stakeholders. This included the 2008 public discussion
paper Eligibility Requirements for Registration on the Do Not Call Register
from which approximately 85% of the 186 respondents supported the extension of
the Register to all telephone and fax numbers.[4]
Coalition Senators do not consider that submissions, now two
years old, constitute either current or adequate consultation about the Bill.
The Australian Association of National Advertisers noted:
For
example, as to the earlier consultation responses—I note the minister’s second
reading speech I think stated that 86 per cent or 76 per cent of submissions
were in support of the proposal. When that is broken down, most of those were
either individuals or individual small businesses—120 or so.[5]
Evidence given by the ACMA Chair, Mr Chris Chapman, during
Additional Estimates hearings of the Senate Standing Legislation Committee on
Environment, Communications and the Arts verified concerns of Coalition
Senators that the Minister had not adequately consulted about the Bill:
Senator
FISHER—Who
wants the proposed Do Not Call Register, and what percentage of businesses—not
numbers—do you expect would register to not be called?
Mr
Chapman—We
simply do not have a view about that.[6]
When pressed by Coalition Senators, the
Minister was unable to deliver any evidence as to who wants the Bill, and why:
Senator
FISHER—This
bill applies to all business, not just small business. Big business, the likes
of Fairfax, told the inquiry last week that they did not like it a lot.
Senator
Conroy—It
has been a particular concern of mine that unwanted and unsolicited calls and
faxes are wasting valuable business resources and could potentially affect the
operation of emergency service organisations.
Senator FISHER—That is a view
of yours. Do you have evidence from business?
Senator
Conroy—Businesses
that choose to register their number clearly want protection against telemarketing
calls. If they do not, then they do not have to.[7]
Coalition Senators are troubled that the motivation behind
imposing the Bill on Australian business seems to rest on the basis of 'a
particular concern' of the Minister.
Indeed, the Committee heard evidence that a business
operator could be derelict in their duty were they to place their business on
the Do Not Call Register.
Senator
TROETH—As
you say, business should be open for business. I would have thought that
this—as you have correctly remarked—went against the Privacy Act by default.
Mr Edwards—Looking at my job, if I put ADMA’s number on the Do Not Call
Register—which would be a little bit funny—and organisations were trying to
sell my organisation products and services that could improve the productivity
I could actually be held in dereliction of duty of my job. The fact is that I
am open for business so I expect to receive calls. If I do not want to talk to
them I will not talk to them.
Impact on business – net negative
The Government intends that the Bill benefit businesses
currently experiencing losses in productivity or incurring additional expenses
through unsolicited telemarketing calls and marketing faxes. The Department
stated:
...businesses, particularly small
businesses, have stated they have experienced losses in productivity caused by
responding to unsolicited telemarketing calls and marketing faxes.[8]
However, Coalition Senators do
not believe that the changes to the Do Not Call Register proposed in the bill
would provide a net benefit to business. In fact, witnesses suggest the Bill is
more likely to lead to productivity and job losses as a result of increased
costs, diminished revenues and additional compliance requirements.[9]
As the Australian Association
of National Advertisers explained:
Our
concerns are the implications across the board that have not been quantified as
a benefit overall for the economy.[10]
Impact on business – increased
costs and red tape
Evidence to the Inquiry noted concern at the ability of
business to meet additional costs imposed by the extended reach of the
Register.
Fairfax Media Ltd noted:
We are very
concerned about the costs... We are fortunate enough to have a very sophisticated
database, probably more sophisticated than those of most companies in Australia.
I do not know how it would be handled within a business on infrastructure that
was not as automated as ours, not as connected as ours and not as well
developed as ours.
That
would be a bigger cost to many businesses that are unfortunately not in a position
to be able to use automated databases in the way that we can. There is an
undeniable cost.[11]
The Australian Information Industry Association (AIIA)
indicated that an individual business would experience a 25 per cent increase
in their marketing costs to implement systems to comply with the bill.[12]
An Access Economics report commissioned by the Australian
Direct Marketing Association (ADMA) and provided to the committee calculated that
the total compliance cost incurred by business in the first year following
introduction of the bill would be $23.7 million, with an ongoing cost of $46–82
million per annum.[13]
Comparison of these costs with the benefits of $34–47
million per annum as a result of productivity gains due to reduced unsolicited
telemarketing calls demonstrates that the costs to business associated with the
bill greatly outweigh the potential benefits.
The Department estimated that:
There will be some compliance costs for businesses
undertaking telemarketing or fax marketing. These costs are expected to be in
line with the costs associated with the current form of the Register, which are
estimated at an average $3000 per year based on a lower level subscription,
staff training costs and record keeping flowing from compliance with the
legislation.
Marketers may need to set up internal systems to ensure that
they are complying with the legislation. The complexity of these systems will
depend on the number of telemarketing calls made by the business. It is likely
that larger businesses already have systems in place to manage their
telemarketing calls, including record keeping.[14]
The Government's figures grossly underestimate the financial
impact of the bill on businesses.
This is in part because Government figures are based on the
existing "Do Not Call" regime, which imposes obligations to
businesses which place calls to private numbers, and assumes those trends can
be transferred to this Bill, which potentially imposes obligations on all
businesses for 'every day' business calls.
This is particularly evident when unquantifiable costs associated
with a reduction in competition, information and innovation; unemployment due
to reduced telemarketing business, and
[l]oss
of revenues via flow-on effects to end-users of products sold through
telemarketing[15]
are also taken into consideration.
The Australian Association of National Advertisers referred
to the possibility of the majority of business bearing the cost of additional
red tape and compliance requirements, for the benefit of the relative few:
If
you have only, say, a thousand or a couple of thousand businesses wanting to
put their name on the register, but two million businesses have to have
compliance systems in place to ensure that they do not inadvertently capture
one of the 1,000 businesses, I am not sure there would be very many people in
business or even among the Australian public who would think that to be a very
good balance.[16]
Coalition Senators believe the Bill, if enacted, would
significantly increase red tape and everyday costs of doing business.
Coalition Senators are unconvinced by evidence to the
Inquiry that any potential benefits of the bill, in terms of neutralising productivity
losses, would outweigh the new cost imposts and productivity losses experienced
by business.
Impact on business – uncertainty
about "telemarketing"
The Bill fails to clarify the difference between
"day-to-day" business and telemarketing, potentially applying to
"routine" business. The Department was unable to satisfy Coalition
Senators to the contrary.
This uncertainty, of itself, comes at a cost to business.
The Australian Association of National Advertisers explained
many businesses would be unaware of the ramifications of the extension:
...many
businesses across the board do not understand that the bill will apply to them
and that telemarketing is what a lot of businesses currently consider just
normal business calls. That goes to not just small businesses, but the micro
and home based businesses as well, who are very unlikely to have any idea.[17]
Fairfax Media Ltd succinctly explained the issue in evidence
to the Committee:
...‘telemarketing’
is a word that means different things to different people...[18]
Mr
Whitehead continued:
What
it means in a business context is that most people who accept business calls from
other businesses do not regard them as telemarketing calls. When a divisional
chief rings someone else who is not currently a business partner and wants to
sound them out about a completely new opportunity that may arise for both
companies, neither of those people would ever imagine they would be called
telemarketing calls.[19]
ADMA also agreed that many businesses are unaware that the Bill
would apply to them, let alone the impact it would have:
You might note from our submission that we found that there
is actually a very low awareness within the business community that the Do Not
Call Register legislation would actually even apply to them. There seems to be
a view that the telemarketing call is something which you get from a call
centre and that is it...[20]
In practical terms, the Bill would extend the Do Not Call
Register beyond companies which regard themselves as in the business of telemarketing,
to potentially every business in Australia.
Businesses contact each other for a multitude of reasons, in
the course of day-to-day operations. Coalition Senators are concerned that the
Bill will impose upon an unquantified number of Australian businesses an
obligation to "wash" phone numbers of those with whom they conduct
routine business.
Coalition Senators believe that the Bill would "over-reach",
hindering the ability of businesses to conduct "routine" business,
and to establish and maintain commercial relationships.
Lack of empirical analysis
Coalition Senators are concerned at the lack of evidence quantifying
the net beneficiaries derived by extending coverage of the Register.
The Australian Association of National Advertisers agreed:
There
will be a cost to businesses and to the economy. Is that really outweighed by
the benefits that are received by those companies? I do not think there has
been any quantification, even in a few of the scenarios presented, of what
those figures might be overall.[21]
In particular, Coalition Senators are concerned at the lack
of quantitative data about the anticipated take up rate of the "extended"
Register:
Question No: 1
Senator Fisher:
How many businesses will register one or more
numbers on the ‘do not call’ register, and what percentage of Australian
businesses is that/are they?
Answer:
It
is difficult to estimate how many businesses in Australia will choose to put
one or more of their numbers on the Do Not Call Register, however, submissions
to the Department and consultations undertaken with industry associations and
small business groups, together with the experience of business registrations
in the UK indicate that the numbers could be substantial...[22]
And the Department was unable to clarify how many businesses
would face the additional compliance obligations of 'washing' call lists against
the Register:
Question
No: 2
Senator Fisher:
How
many businesses will need to access the register to have numbers ‘washed’, in
order to ensure they do not breach the new provisions, and what percentage of
Australian businesses is that/are they?
Answer:
All
businesses making unsolicited telemarketing calls or sending unsolicited
marketing faxes to Australian telephone or fax numbers will be required to
comply with the legislation...
As at 30 June 2009 there were 2 948 telemarketers
registered to use the service provided by the register operator to wash their
numbers against the numbers on the Do Not Call Register. As there may be
businesses that make telemarketing calls or send marketing faxes to businesses
only and that therefore are not already registered to use the washing service,
it is likely that this number will increase.[23]
Nor was the Department able to quantify how often a business
would face new obligations under the Bill.
Question No: 3
Senator Fisher:
(In
respect of 2 above) how often, and over what period of time?
Answer:
A ‘washed’ list remains valid for 30 days. Any
organisation that wishes to make telemarketing calls or send marketing faxes on
a regular basis will need to wash their list of numbers against the Register at
least every 30 days. However this may vary amongst organisations, as some may
undertake telemarketing or fax marketing activities less than once every 30
days. This will affect how often they would need to ‘wash’ the numbers against
the Register.[24]
Coalition Senators are concerned by the lack
of evidence substantiating:
a. How many businesses will seek to benefit from the Bill
(by registering "do not call" numbers), and,
b. How many businesses will carry new obligations from
the Bill (by having to "wash" numbers against the register), and how
often.
Coalition Senators remain to be convinced
that the Bill will do anything other than burden most businesses, yet benefit
very few (if any) businesses.
Concluding Remarks
Coalition Senators remain concerned at uncertainty about the
scope and impact of the Bill and corresponding ramifications for business, especially
the probably majority of businesses which have not previously interacted with
the current Do Not Call Register.
Any difference between day-to-day business calls and "telemarketing"
remains unclear. Further, the Department and the Minister have been unable to
quantify the businesses which will benefit from, or the businesses to be
burdened by, the extended reach of the Register.
Without appropriate data to assess any alleged demand for
the extension, Coalition Senators are not convinced the Bill will deliver the
stated objective of benefiting those organisations currently experiencing
losses in productivity or incurring additional expenses as a result of
unsolicited marketing calls or faxes.
Recommendation 1
1.2
At this stage, for the reasons outlined above, Coalition Senators are
yet to be convinced that the Bill should proceed.
Senator Mary Jo Fisher Senator
the Hon. Judith Troeth
Deputy Chair
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