Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

I welcome the opportunity to speak on what is an important debate. As a member of the Joint Committee on the National Broadband Network, I have observed the progress of the project over some time, as has the member for Lyne, who is the chair of that committee. As a committee of the parliament, the role that we serve on that committee is very similar to that of a board of directors for a company. In our responsibility to report back to the parliament on the progress of the project, we have an obligation to report the facts as we see them. But we also have an obligation to examine and test the propositions that are put before us by NBN Co. and the shareholder ministers. That is our responsibility to the parliament: to ensure that we are getting a rate of return on the project as has been promised, to ensure that the funds are spent wisely, to ensure that the committee is able to report the truth of what is happening on the ground with regard to the NBN project.

It concerns me that the member for Lyne has been quoting the rate of return of seven per cent. I know that he has some justification for that; in the business plan it clearly states that the internal rate of return is seven per cent. But there are a number of problems with that calculation, because as we all know the internal rate of return is a rate that discounts future cash flows back to zero; that is the way the internal rate of return works. The problem here is that we are seeing significant and systemic problems with the project. We are seeing very significant delays to the project; we are seeing massive capital costs upfront. And they are necessarily massive, because that is the way big infrastructure projects work: you have big capital outlays in early years, and they may continue for a period of time, and the income comes at a later time. The problem we see with this project is that we are having massive cash outflows, but the project is being delayed and delayed and delayed. That has major repercussions for the rate of return of the project. If the rate of return of seven per cent as originally promised is to be achieved, what needs to occur is a massive acceleration of the project in later years—and we have seen no evidence of an acceleration in the rate so far; in fact we continue to see significant problems occurring at every turn.

We see significant problems being encountered with regard to the fixed line rollout—not necessarily at the technology end but certainly at the civil works end where you are dealing with the difficulties of operating in confined metropolitan and regional environments, where you have to work around the built environment, something engineers have been dealing with throughout civilisation, working with what is already there. With the wireless network we see very significant delays. In fact the wireless network will not achieve half of the forecast rate of rollout that has been put forward.

So we have seen NBN Co. making a range of forecasts—we had business plan No. 1; we had the revised business plan and substantially downward revisions in expectations with regard to the rollout—and what that means for the returns of the project is that, to keep and maintain that rate of return, you have to see a massive acceleration in the cash flows in later years. You have to see much later, much larger, increases in income to compensate for the slow rollout. I see no evidence of that being likely to occur. With regard to the risk of the project, when you are relying on very big increases in income in later years, there is a substantial increase in the risk. The costs going out now we know: they are certain; the cheques have been written for those amounts. But the revenues we are going to receive in years 7, 8, 9, 10, into the out-years, are unknown and they attract a higher risk premium, if you are looking at this as a particular investment decision. So there is real concern, and when the member for Lyne accepts the fact that there is a seven per cent return, I think he should question that point, because nothing has occurred to date to give us any confidence that the rate of return is going to achieve anything like seven per cent. And in fact it is likely to be less than half of that, the way this project is going where there is a delay at every turn. And that is going to be at massive cost to the taxpayer.

The next issue goes beyond the rate of return and that is the digital divide. What we are seeing through these delays to the project is that people in regional areas are being denied access to high-speed broadband. What the coalition's proposal does is attempt to get high-speed broadband to all Australians by 2016. I think that is an important objective. The increase in speeds from very slow dial-up speeds to a reasonable level of service is where you get from a national perspective the greatest productivity gains. The member for Wentworth noted this in his contribution and I am sure that the member for Lyne would agree.

Unfortunately what we have with NBN Co. is a rollout that is so slow that many people in regional areas are being denied access to high-speed broadband. So, rather than being a project that delivers for people in rural and regional areas, it is perversely starting to become a project that will deny people access to high-speed broadband. We can have very little reliance, we know, on the forecast for NBN because each forecast revision is less successful than the one before. We do not see NBN Co. advising this House: 'We have taken remedial action and as a result of that we have increased the speed of the rollout in areas A, B and C.' What we see is endless downward revisions in the rate of progress and an attempt to conceal that. That is of great concern; information that is vitally important for the parliament to know is being concealed. And that is a real concern for us.

Government members interjecting—

It is being concealed. We never get frank advice. We never get frank information on the progress of the rollout. We never get a report across the sites as to how the various sites are progressing. What problems are being incurred. What remedial actions are being taken to return to program. It is a real concern. It is a failure of reporting. It is a failure by the shareholder minister. It is a failure by the committee to hold NBN Co. to account for the problems with the rollout.

Really the coalition will address this because, if we have the honour of being elected on 14 September, we will address the issue of the digital divide directly by requiring NBN Co. to attend to those areas with the worst broadband services first. That is a major distinction. The Labor Party is quite happy to roll along, rolling out broadband wherever it is politically expedient, ignoring the needs of so many people in the bush. What we will be doing is: within 90 days of being elected we will have a report on the worst areas of broadband service and we will be directing NBN Co. not to duplicate services in Ballarat and not to duplicate services in metropolitan areas. We will be requiring them to address areas where there are problems with broadband—be they regional areas or metropolitan areas—not just addressing political problems for this Prime Minister and her beleaguered government. I think that is an important difference. Increasing the speeds where broadband must be most urgently improved will have the greatest productivity gains and the greatest enhancement in attending to the digital divide.

The coalition is focused not only on fixed line broadband. We are very mindful of the problems with regard to mobile. This government has dropped the ball on mobile communications. It has not spent one dollar on mobile communications since coming to office, and that is a major problem. If you have not noticed, I say to members opposite, since this project was mooted, we have had the release of the iPhone and the iPad—have you heard about the iPhone or the iPad? They have come along. There is a massive demand for mobile service as well as for increasing demand in fixed line service.

I would say to you: focus on the entire digital situation, do not just blindly follow along this very narrowly focused NBN project with a single technology. The coalition will be addressing the issue of mobile communications if we are elected to government. The coalition will be delivering broadband services where they are needed most. We will be doing that first. The coalition will guarantee acceptable speeds for broadband for all Australians by 2016, unlike what the current government is going to do which will see people in regional areas perhaps waiting decades for their service to be connected because this government cannot manage major projects. This government cannot bring projects in on budget. We have seen pink batts and school halls being repeated again and again.

See this speech in context