The government should use general taxation to raise money for its rural broadband initiative instead of taxing Telecommunications Industry Group (TIG) members, TIG CEO Rob Spray said.

Formered earlier this year, TIG's members include Telecom, Vodafone and Kordia, but not TelstraClear or 2degrees.

Mr Spray said the group welcomed the initiative to bring ultra-fast broadband to rural schools and communities but said the government should add on a broadband tax instead of sourcing around $252 million of its $300 million budget from the group’s members.

He said TIG members had already invested $10 billion into New Zealand's telecommunications infrastructure. Mr Spray said the group also supported the government subsidising money through grants where rollouts were not commercially justified.

“While the TIG supports further investment in rural New Zealand, doing it through an industry tax is not an approach that we up hold. The TIG will be looking into ways to evolve this tax and pass it on much as airport taxes or road taxes are passed on directly to customers.”

Mr Spray said there were three funding options; one the group sacrifices the earnings of its members to meet the government’s demands, two it embeds the cost in customer invoices, therefore burying it, or three it makes the charge transparent and expects the customer to foot the charge.

“The government should be raising funding through general tax. This is a social objective for the betterment and wealth of the country. It should be general tax rather than focusing on a specific industry body.

“We will file a submission on the consultation process, but I don’t think they [the government] are going to listen. They aren’t going to raise new taxes. This government is running to a tight budget. So, the issue is how the charge is passed on.

“Eventually the customer always pays but its whether you are transparent about it or not,” Mr Spray said.

Labour welcomes rural broadband proposal
Meanwhile, as Mr Joyce continues to shovel public funds at broadband, out-Labouring Labour, the opposition finds itself in the familiar position of welcoming the communications minister's latest move, but questioning details.

Labour welcomed the government’s rural broadband proposals yesterday but doubted whether it could deliver fast broadband and affordable local phone services to all rural communities.

Labour communications and IT spokeswoman Clare Curran said: “National has now set expectations for broadband delivery in rural and urban areas that will need to be met, but there are several important questions still to be answered before the government can begin trying to deliver on its promise.

“Labour notes plans to make an extra $52 million available for rural broadband as ‘interim funding’ on top of the existing $48 million commitment in this year’s budget," she said.

"This additional funding will (apparently) be borrowed from the $1.5 billion ultra fast broadband fund. This is creative accounting by the government and needs to be clarified.”

Ms Curran said Labour would look closely at the details of both proposals and would remain committed to ensuring the government delivers on its commitments and is faithful to the underlying objectives of the Telecommunications Services Obligations (TSO), to protect consumers and deliver telecommunications to all New Zealanders.

Submissions on both papers – the proposed rollout of ultra fast broadband to rural New Zealand and the propose changes to the TSO – close at 5.00pm on Friday 30 October 2009.