Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

There is one question before the House today. That question is whether the default in our public policy, which is that significant pieces of public expenditure should as a standard and routine practice be subject to the scrutiny of the Public Works Committee, ought to apply to the National Broadband Network. That is the question we are considering here in the House today. In other words: should the parliament, should the legislature, should the people’s representatives have the opportunity to scrutinise a particular project which has been put forward by the executive branch of government?

As we ask ourselves that question, let us just ask a little bit about what you might expect would be the characteristics of a project which would appropriately attract the scrutiny of the people’s house. If, for example, the government came forward and said, ‘We are proposing the biggest infrastructure project in Australia’s history,’ would you think it was a good idea that a project of that magnitude ought to be subject to the scrutiny of the Public Works Committee, the routine, default, standard procedure employed in government in Australia for many, many years? If you saw that the project involved the expenditure of an enormous amount of money, $41 billion of taxpayers’ money being put at risk, an amount which the most elementary calculation will tell us is over 10 per cent of the budgeted annual expenditure of this Commonwealth government—if you saw that an amount of this magnitude was proposed to be spent, would you say to yourself, ‘This looks to be a good candidate for being subject to the routine, standard, business-as-usual, ordinary mechanism of oversight and scrutiny by the people’s house’? I think you would say that that was a good candidate.

Would you say that a project was a good candidate for scrutiny by a committee of the House of Representatives if you discovered that the proposed financial arrangements for this project involved the Commonwealth incurring a weighted average cost of capital of over 10 per cent? The source for that number is the corporate plan of NBN Co., issued publicly in December last year. If you saw at the same time, from reviewing that corporate plan, that the rate of return to be earned by this project—which this government considers it is a good idea to allocate $41 billion of taxpayers’ money to—was seven per cent, you might start to ask yourself some questions and say, ‘This appears to be a particularly good candidate for scrutiny by the Public Works Committee, the routine, standard, default, business-as-usual mechanism by which the parliament maintains scrutiny over public works to be carried out at the instruction of the executive government.’ You might very well also say to yourself: ‘This is extremely interesting. When I compare a weighted average cost of capital of over 10 per cent with a rate of return of seven per cent, what do I find? One of the most basic propositions of corporate finance, and that is: if your rate of return is less than your weighted average cost of capital, you are losing money, you are vaporising taxpayers’ capital.’

So the net present value of this project is heavily negative. And that alone might very well be enough for this House of Representatives to say: ‘Actually, we’re not too enthusiastic about this bright suggestion from government that this project ought to be exempted from the normal mechanisms of scrutiny and oversight. Actually, we’ve seen quite enough to think that alarm bells ought to be ringing. Actually, we think it would be a very good idea if there was the capacity for the House of Representatives, the people’s house, to exercise independent scrutiny and oversight of this project because, quite frankly, what we’ve seen gives us very little confidence that the executive branch of government has this thing under control. On the contrary, it is clear from the papers they have issued that they are vaporising taxpayers’ capital at a remarkable rate.’

You would also see as you looked at the papers which have been released by the executive branch of government in relation to this project that even that paltry rate of return of seven per cent, which they have the temerity to suggest to the Australian people that their money ought to be allocated to, is based upon a series of highly unrealistic assumptions. You would learn, for example, from the corporate plan issued by NBN Co. just before the end of last year that the current rate of penetration of wireless households is slightly over 13 per cent. You would also learn that that rate has risen quite sharply in the last few years. If you were to look at the trajectory at which the rate of wireless broadband homes is increasing, you would think that it was highly likely that that rate of penetration would increase, particularly having regard to the fact that it is the policy of the Gillard government—a policy not contested by this side of this House—that it will shortly auction off spectrum in the 700 megahertz band and that the telcos, should they be successful in acquiring that spectrum at auction, will use it to deliver 4G wireless broadband. So you might very well think that it was likely that the proportion of wireless-only homes was only going to increase. You might again think that the answers which have been provided by this government to those questions are wholly unsatisfactory and give you and, more importantly, taxpayers no satisfaction or certainty at all that taxpayers’ money is being spent wisely. And you might particularly think that when you turn to the page of the corporate plan which states that it is assumed the penetration rate of wireless households will reach only 16 per cent by 2025, notwithstanding the fact that it has risen from four per cent to 13 per cent in only a few short years.

There are a host of reasons why any objective observer looking at this project might say that the ordinary, normal, business-as-usual scrutiny mechanisms which apply to major public works under the act, and have applied for many years, ought to apply in this circumstance as well. You might also turn your mind to the political background of this project. What was first proposed was that $4.7 billion of taxpayers’ money would be committed to this and it would be a fifty-fifty joint venture with a private sector company. We later learned, in 2009, that that promise, that proposal, that project, was being scrapped, junked, because Labor could not deliver it and it was being replaced with a proposal to spend $43 billion on this project—that should ring some very serious alarm bells. At least we were assured at that time, by the then Prime Minister Rudd, that all $43 billion was not going to come from the public purse because there was going to be significant private sector involvement as well. Then, in May 2010, we learnt that that had gone by the board as well and it was going to completely funded by public sector investment—that was the recommendation in the implementation study. Now, we learn that it will be funded by $41 billion of public money.

We heard previously from the minister that there were no grounds to suggest that the ordinary arrangements ought to apply because there had been plenty of scrutiny, and he instanced the implementation study. But he did not mention the fact that the implementation study, having been provided to the government in December 2009, had been dropped by this government in May 2010—three short days before the budget. What kind of commitment to openness and scrutiny is that?

The question before this House is a very simple one: is this a project which is of such little moment, which raises so few issues of substance, which ought to trouble the taxpayers and citizens of Australia to such a little extent that we ought to waive the normal, default arrangements under which the scrutiny of the Public Works Committee would apply? It is very clear, from even the most cursory examination of the circumstances around this project, that the opposite is true. If ever a project deserved the bright light of scrutiny through every mechanism available to this parliament as the people’s House, on behalf of the taxpayers and citizens of Australia, it is this project, and that is why we moved this motion.

Question put:

That the motion (Mr Turnbull’s) be agreed to.

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