Communications Minister Paul Fletcher has revealed the Morrison government went to market for a new National Relay Service provider, after a company associated with the current contractor "actively marketed" handsets to residents of retirement homes.
Australian Communication Exchange, or ACE, lost the contract for the service - which allows people who are deaf, hard of hearing or who have a speech impediment to make and receive phone calls - in July.
Concentrix will take over the service in February but will not support CapTel handsets, as Australian Communication Exchange has an exclusive licence to use the technology in Australia.
But under parliamentary privilege, Mr Fletcher accused AccessComm - which is linked to Australian Communication Exchange - of targeting "elderly Australians living in retirement villages" with marketing about its CapTel phones, "evidently with the aim of increasing customers".
The phones were advertised as costing $55 a year, "less than a Telstra phone", Mr Fletcher said.
"For these reasons the government determined to hold a competitive tender process to select a company to provide the National Relay Service for the next three years," Mr Fletcher said.
The department previously said the change was necessary after years of cost overruns made the existing contract "unsustainable".
Mr Fletcher said there had been a "sharp increase" in the number of call minutes from CapTel devices, which drove the cost blowout for the relay service.
"Between 2015-16 and 2018-19 the annual cost of providing the National Relay Service increased by almost $10 million meaning there was a 45 per cent blow out in cost," he said.
Then during the 2019 tender process, Australian Communication Exchange tried to almost double the cost per minute rate charged to taxpayers, from their then current rate of $4.44 to $7.49.
Mr Fletcher said the company tried to "leverage" the fact it had an exclusive licence to the CapTel technology in Australia to justify the increase.
"Clearly such an offer was unacceptable to the Commonwealth," Mr Fletcher said.
Mr Fletcher said the government would support the continuation of CapTel if the US manufacturer Ultratec would strike an "acceptable" deal with Concentrix. His department has been in negotiations with Ultratec over the matter in recent weeks.
But AccessComm director Tony Bennetts said the minister's statement was "not quite correct".
He denied that CapTel phones were being advertised as cheaper than Telstra phones, as Telstra provided teletypewriters for $36 per year.
But AccessComm's own website spruiked the CapTel 840i as "rent for $55 a year, less than a Telstra phone". Mr Bennetts said he would investigate how that claim ended up there.
Mr Bennetts admitted an organisation called Conexu had been providing CapTel handsets to retirement homes and some hospitals.
The Conexu website lists Stephanie Meares, Bernie Hogan and David Heckendorf on its board of directors. All three were listed as directors of Australian Communication Exchange on its latest financial report.
But Mr Bennetts said there was nothing untoward about the arrangement.
"How can it be nefarious helping people use the telephone in an environment where there's many elderly people?" Mr Bennetts said.
"The CapTel phone is marketed towards ageing Australians losing their hearing because they're not comfortable with the alternatives, they're comfortable using standard telephones."
Mr Bennetts said the rise in CapTel minutes was not being driven by AccessComm trying to boost its customer base, but by Australia's ageing population.
"There's no cost blowout - more people need the service now than ever," Mr Bennetts said.
Mr Bennetts said he was unable to comment on Australian Communication Exchange's bid to raise the rate to $7.49.
"My understanding was all the bids are confidential as part of the tender process," Mr Bennetts said.
He said the federal government was continually changing its story about why it decided to go with a new provider.
Mr Bennetts was in the process of shutting down AccessComm, and while he could not speak for Australian Communication Exchange, he believed many relay officers had been made redundant as services transitioned across to Concentrix.
"I'd direct you to the Save CapTel Facebook page to see how that's gone," Mr Bennetts said.
Indeed, users of the service are reporting problems with the switch there, with concerns about calls dropping out and delays in captioning.
But Mr Fletcher said Australian Communication Exchange had created "unnecessary anxiety" about the future of the National Relay Service.
He said he had been disappointed with the conduct of Australian Communication Exchange and AccessComm, since they lost the contract.
"In my opinion Australian Communication Exchange intentionally withheld information from the Commonwealth about CapTel users," Mr Fletcher said.
"Australian Communication Exchange has been providing misleading information to the media and actively resisting the government's efforts to provide information to CapTel users to help them understand the transition process."
Mr Bennetts maintains AccessComm and Australian Communication Exchange are separate entities, despite AccessComm's shares being wholly owned by a company called DHL Holdings, of which Edward Gilliland is a director. Mr Gilliland is also a registered officeholder of Australian Communication Exchange.
He said AccessComm handed over the list of users to the government, despite earlier concerns that it could violate privacy laws due to legal advice that said they could divulge the list if there was potential for a life-threatening situation.
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