Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Link to this | Hansard source

The National Broadband Network Companies Bill 2010 and related bill are the second large pieces of legislation relating to the establishment of the National Broadband Network, which is the government’s plan to have a Commonwealth government owned, monopoly telecommunications provider of last-mile, fixed telecommunications to every home and business in Australia. It is intended to be a monopoly. Elaborate steps have been taken to this end in the legislation passed last year, in this legislation and indeed in the contractual arrangements with Telstra already announced and those with Optus which have been foreshadowed. The purpose of all of those is to eliminate any prospect of fixed-line competition with the National Broadband Network so that Australians who want to access the internet or simply want to make a telephone call on a fixed line will have no alternative but to use the government owned monopoly.

The opposition is fully committed, as I think all Australians are, to there being universal availability of fast broadband at an affordable price. We are all committed to that. The most important issue of difference between the coalition and the government on this is the fact that the government is proceeding to achieve this goal, so it says, without any effort or attempt to determine whether the approach it is taking is the most cost-effective one.

This is a government that came into office led by the honourable member sitting opposite, the current Minister for Foreign Affairs. When he was Prime Minister he said, as did his Minister for Finance and Deregulation, Mr Tanner, that no major infrastructure project would be undertaken or funded by the government without the benefit of a rigorous cost-benefit analysis. The Secretary to the Treasury, Dr Henry, has written and spoken extensively and repeatedly about the need for rigorous cost-benefit analyses of government infrastructure.

The fundamental question here is not what the object is, which is getting everybody access to fast broadband, but what is the most cost-effective way of delivering it. We know there are a variety of technologies—wireless, DSL, HFC cable, the fibre-optic system and many other systems—that are available to deliver broadband and which are being used by Australians and indeed people all around the world to access broadband. The question is: what is the most cost-effective way of delivering it? What is the way that can get Australians access to fast broadband as quickly and as cheaply as possible? That is why the coalition has argued that there should be a Productivity Commission inquiry to look into this and determine the most cost-effective approach.

Were the government to take up that invitation—and, of course, it has refused to do so—it would be doing no more than honouring the principles that it stated as being fundamental to its approach to the management of public finances when it came into government. Not only did the then Prime Minister and the then finance minister say that no major infrastructure project should be undertaken without a rigorous cost-benefit analysis; they went further and established Infrastructure Australia, a specialist expert body whose job it is to identify, prioritise and analyse through cost-benefit analysis major infrastructure projects. Yet this one, the NBN, the biggest in our history, is not being looked at by Infrastructure Australia—they are not allowed to examine it—and it certainly is not going anywhere near the Productivity Commission.

The absurdity and the recklessness of the government’s approach were brought home to the members of the Parliamentary Standing Committee on Public Works very vividly only last week. We were in Brisbane considering, as is our duty as members of the Public Works Committee, a proposal by the Department of Defence to spend about $50 million on a variety of hangars for the reception, distribution and maintenance of wheeled vehicles for the Army at a number of locations. We considered that $50 million investment proposed by the defence department and we heard from an official of the department about how he and his colleagues had conducted a cost-benefit analysis. They had looked at this from every angle: should they be leasing premises; should they be building these facilities at other locations? They justified everything on the basis of a cost-benefit analysis. In other words, they knew what they wanted to do—have facilities to receive and distribute a certain number of thousands of new wheeled vehicles over a decade and, of course, train people to operate them—and then they looked at the most cost-effective way of doing that. That was being done in respect of a $50 million project, and the Public Works Committee, solemnly assembled there in Brisbane, was considering that.

Yet the government, who presumably believe that a cost-benefit analysis and the scrutiny of the Public Works Committee are appropriate for $50 million worth of vehicle hangars, are not prepared to perform a cost-benefit analysis on a project that will see the expenditure of around $50 billion of taxpayers’ money. Furthermore, they have taken steps—and it will be up to this House to determine whether those steps are successful—to prevent the Public Works Committee, which was established to monitor and investigate infrastructure paid for by the Commonwealth, considering that $50 billion project. If the government have their way, the largest infrastructure project in our history will not be subject to a cost-benefit analysis, it will not be scrutinised by the Public Works Committee and, of course, in the most recent example of their efforts to prevent any proper scrutiny of this project, the government have even sought to exempt it from the provisions of the Freedom of Information Act. So the public are to be locked out from scrutinising this project and there is to be no effort to ascertain whether this is the most cost-effective way of achieving this goal. These are all in the interests of politics and the government’s desire to build this massive fibre-to-the-home network without any scrutiny.

The double standards here are extraordinary. I have talked about the contrast between the former Prime Minister’s very responsible rhetoric when he came into government about performing cost-benefit analyses on major infrastructure projects and the failure to do one on this. Now, turning to the current Prime Minister, we see that she has announced that there will be a reconstruction inspectorate to oversee the public spending on the reconstruction in Queensland with a view to minimising waste. She said:

… it’s appropriate to have these mechanisms to ensure that every dollar is a dollar that is spent effectively, and that every dollar spent from taxpayers’ money goes to do work that is necessary to rebuild the nation

…            …            …

It’s my determination to get value for money for every taxpayer dollar spent.

She has appointed a former coalition finance minister and Premier of New South Wales, the Hon. John Fahey, to chair that reconstruction inspectorate, and I think that is a very eloquent vote of confidence in the financial acumen and financial responsibility of the coalition as opposed to the members of her own party.

Nonetheless, this level of scrutiny has been established to oversee $5 billion of spending which, in large measure, will be to repair roads, railways and other pieces of public infrastructure, yet there is no comparable body, no comparable effort, to oversee or monitor in any way the NBN $50 billion—the expenditure of 10 times the $5 billion. It is as though the government has developed an extraordinary blind spot with respect to this project and all of the principles of financial and fiscal responsibility are cast aside when it comes to the NBN. The thing that puzzles all Australians, and particularly members of this House, is that one can well understand a government saying to the people of Australia, ‘We will ensure that everybody has access to fast broadband. We recognise there are some parts of Australia that do not. There are many parts that do, but there are some that do not for a range of reasons: distance, the history of the network architecture laid out by Telstra in years past—a range of reasons. But we, the government, will ensure that all of those inadequately served areas are served adequately and that all Australians get access to broadband at the fast speeds that are available in the adequately and well-served areas in our capital cities.’ That would be a reasonable, respectable, responsible promise from a government.

But then, having made that promise, the taxpayers of Australia would expect the government to say, ‘And we will deliver on that promise in the most cost-effective way possible, and we will make sure that the big vision—the big promise—is delivered at the least cost to you, the taxpayers.’ Of course, that will not only mean there will be less burden in terms of the cost to the taxpayer and there will be more money available for all the other claims for public infrastructure; it will also mean that the less investment there is to deliver the service the less pressure there will be on prices. The more heavily capitalised any piece of infrastructure is, the more pressure the owner of that infrastructure will be under to raise prices. If, like the NBN, it is a monopoly, it will have very little disincentive or restraint in terms of raising prices.

It is a matter of public knowledge that the approach the government is taking here in Australia is unique in the world. There is no government in the world that is spending as much on broadband as Australia. Indeed, on my calculations a few months ago I estimated that the per capita differential between what the federal government is spending on broadband here in Australia and what the American federal government is spending is 100 to one. That is to say we are spending, on a per capita basis, 100 times as much as the Americans are spending. I saw an article in the Australian earlier in the week which suggested that the differential was only 65 times or thereabouts. Whether it is 65 times or 100 times, the difference is gigantic. Right around the world this project is being criticised as fiscally irresponsible. The most recent criticism is laid out in the report of the Economist intelligence unit published today: ‘Australia’s broadband plan fares poorly in new international ranking. Cost to taxpayer is exorbitant,’ says the study. That is just one of many objective reports that have questioned the responsibility of this project.

This legislation is designed to provide some rules as to how the NBN Co. will operate. One of the principles that it is designed to achieve is to define it as not a public authority. Of course, by defining it as not a public authority it is exempt from the statutory requirements to comply with the freedom of information legislation and means that it would not be subject to the normal parliamentary oversight of public works defined in the Public Works Committee Act 1969. I foreshadow that we will be seeking to amend the legislation. I look forward to the support of the members of the crossbenches, who are committed, as they have often said, to financial responsibility and accountability. We will be seeking to amend the legislation to make it subject to both the freedom of information laws and also the Public Works Committee Act.

The other principle the legislation is designed to achieve is to restrict the NBN Co. to business activities which are directly related to its core function of supplying wholesale communication services—that is, prevent it from operating as a retailer. That certainly is an admirable objective and one that we support, but we do not believe the proposed legislation will adequately achieve that. We will seek to amend the legislation in a number of ways to make it quite explicit that the supply of services by the NBN can only be on a wholesale basis and, in particular, to prevent the NBN getting around this provision to provide that it must not supply services to another person unless that other person is a carrier or service provider and is a carrier or service provider which will use its service to supply services to the public. That is to prevent, for example, a large corporation establishing its own bespoke carrier whose only job is to provide services to the corporation concerned. This is of considerable importance because the NBN, being so heavily capitalised, having such a crippling interest bill—as it will—and having so many billions of taxpayers’ money invested in it, will be under enormous pressure to use its monopoly power to generate additional income. One obvious way of doing that is creeping further and further into the retail space.

We will also seek to amend the provisions of the legislation relating to the ownership of the NBN. The Gillard government is effectively a coalition, consortium or alliance with the Greens, and one of the prices that the Prime Minister has paid for the support of the Greens is the agreement to make the NBN virtually impossible to sell. The way the legislation works is that it cannot be sold until such time as it is complete. It cannot be sold when it is part built; it must be absolutely complete. Looking around the room, there are a few of the younger members that may still be here when it is built, but I suspect those of us here around the table probably will not be here by that time. That really fetters the future governments in a completely irresponsible way, and we will seek to amend the legislation to enable a future government to sell the NBN, if that is what it considers to be the appropriate course of action, subject to having a Productivity Commission inquiry and a review by a parliamentary committee. We do not have any objection to that.

We will also seek to amend the legislation to make sure there are no loopholes in terms of the NBN creeping into the retail space. In the legislation at the moment there is a provision, for example, that would enable the NBN to acquire and own a retail company in the telecommunications area but have an obligation to dispose of it within 12 months. There is no reason for that grace period. I think most members have either participated in or observed transactions where restructuring of a company to be acquired is a condition of the completion of the acquisition. There should simply be a prohibition on the NBN acquiring retail businesses and, if it seeks to buy some infrastructure which has a retail business attached to it, the disposition of that retail business should be a precondition of completion. That is neither a complex nor a difficult thing to achieve, but it will maintain the principle of ensuring that the NBN is not in that retail space.

One of the big issues that the government has to face with the NBN is that because it is a monopoly, because it is so heavily capitalised and because it belongs to the government it naturally now wants to maximise its revenues and it wants to do so in a way that inhibits competition. So it has reached an agreement with Telstra to prevent Telstra offering broadband services on its HFC network. The absurdity and the wastefulness of that arrangement, which was supported by the legislation that was carried through the parliament last year, is worth reflecting on for a moment.

The government tells us the object of the NBN is to deliver 100 megabits-per-second broadband to 93 per cent of homes in Australia. Let us assume that that is a worthy and a necessary objective. The HFC cable network passes 30 per cent of Australian households now. All of it can be—and, indeed, in Melbourne already has been—upgraded to deliver broadband at 100 megabits per second. So where is the market failure? Where is the crying need for an upgrade in service? If the government were going to spend scarce resources to deliver 100 megabits-per-second broadband, surely it would focus on areas that were not served at all. But no, it is going to overbuild and render obsolete, for broadband purposes, a cable system that passes 30 per cent of Australian households.

Then we see the issue of competition from new cable systems. As the McKinsey implementation study set out very clearly and graphically, there is a risk to the NBN that the private sector might build cable systems in more densely settled areas and offer services at lower prices than the NBN in those areas, which would cause the NBN to lower their prices across the country and undermine the economics of the NBN.

But wasn’t the NBN designed to enhance competition? Wasn’t the NBN designed to ensure Australians get access to broadband at affordable prices or at lower prices? Apparently not. Apparently having created this government owned monopoly, this monolith—having made that mistake—the object of the government now is to compound it and prevent anybody from competing with it. So, as recommended by the implementation study, for no reason other than protecting the economics of the NBN, the government is proposing in this legislation to inhibit the building of any competitive cable networks, fast broadband networks, by providing that they must offer a layer 2 bitstream service on the same terms and conditions as the NBN. That is an entirely objectionable restraint on competition and it is designed to do one thing and one thing only. It is a product of the recommendation of the implementation study and it is designed, as McKinsey wrote in that study, to underwrite and underpin the economics of the NBN itself. We will seek to amend that as well.

The other issue related to the question of wholesale versus retail is the nature of the parties, the companies or the persons, to whom the NBN can sell its services. In clauses 10 to 16 of the National Broadband Network Companies Bill 2010the first of the two bills—there are provisions to enable the NBN to sell directly to a range of utilities: electricity utilities, water utilities, sewerage utilities, transport utilities and others. There is no restriction on the nature of telecommunications services the NBN can deliver to those entities. A number of those entities have said to us and to others, ‘We would rather just deal with the NBN. We don’t want to deal with a middleman. We don’t want to deal with Telstra, Optus, iiNet or Macquarie Telecom. We want to deal directly with the NBN.’ They want to cut out the retailer. So would all major customers for telecommunications services.

If that principle were to be supported by this parliament it would in effect be saying the NBN can move further and further into the corporate and institutional telecommunications business and perhaps not provide services directly to residences, to mums and dads at home, but move into providing telecommunications services directly to large institutions and large corporations—in other words, to become a large retail telco: a government and corporate retail telco and a wholesale telco for the rest of the market. So the government is either serious about the NBN being a wholesale-only telecommunications provider—in which case there should be a very clear limitation along the lines that we are proposing with no exceptions—or not.

Once this broadband network is operating, the temptation—and this will apply to any government—will be for it to creep further and further into the more valuable areas of telecommunications services, further and further onto the retail turf of other privately owned telecommunications companies. It will be under pressure to do that because of the massive amount of debt that it is carrying. You can imagine bureaucrats in the Department of Finance and Deregulation and Treasury saying to people running the NBN: ‘Can’t you find some additional revenue? You are bleeding red ink. This is an enormous expense. Why can’t you find some revenue?’ The only way they can do that is by moving out of the wholesale-only business into providing telecommunications services directly to end users—in other words, becoming a retailer. We intend to hold the government to account there.

In terms of the threads of principle that run through our amendments, it is really a function of holding the government to account. We have amendments to ensure that the NBN is strictly a wholesale business. We have amendments to ensure that the NBN is truly, properly and thoroughly accountable to the Public Works Committee and to the public through freedom of information legislation. We have amendments to ensure that future governments are not fettered, as the Greens have demanded as the price of this deal, so the NBN is impossible to sell under almost any circumstance.

Finally, the other item consistent with that is that we will seek to amend the legislation, as recommended by the Senate Select Committee on the National Broadband Network, to provide that the NBN must not discriminate between access seekers—that is to say its customers, its retail service providers—on the basis of volume. There is a very real concern that the NBN, which is currently able to offer volume discounts under this legislation, will offer big volume discounts to the larger retail service providers—Telstra in particular—and give those companies an enormous competitive advantage over their rivals in the retail space.

So those are the amendments that I foreshadow. I look forward to debating them with honourable members opposite.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

We start the new parliamentary year where we left off. Over the break some things did not change. The first thing that did not change is Australia’s world ranking when it comes to broadband. We are now trailing countries like Estonia, Latvia, the Czech Republic and Slovakia. We are edging closer to copper surely hitting its use-by date. Another thing has not changed. There has been no progress from those opposite on having a policy. I thought maybe over the break they would have developed a policy. But no, it was so good the first time around that it is still on their website. It was such a hot seller the first time around, they have still got it.

The member for Wentworth has foreshadowed some amendments. I look forward to discussing those in detail. We have again heard his constant catchcry that the NBN is some anticompetitive monopoly. He talked about existing networks being able to provide at less cost what the NBN can provide. I want to correct him on one technology point. He talked about cable. Cable is like spectrum; it is a shared resource and its capacity is not anywhere near that of fibre.

Why is it necessary for the government to take this course? Because the market has failed. Infrastructure based competition in Australia has failed. NBN Co. will be subject to the most rigorous, bespoke regulatory tools that are contained in the National Broadband Network Companies Bill 2010 and cognate bills and the legislation we passed last year. It would not be complete without going back to the cost-benefit analysis argument. I am actually very happy to take advice on this point from Vint Cerf, one of the fathers of the internet. He said recently that he is jealous of what we are developing here in Australia and he acknowledges that it is impossible to quantify all the nonprice benefits that the NBN will offer, because of all the future benefits that we do not even know about yet.

I refer the member for Wentworth to existing studies that have in fact attempted to quantify, as best as possible, the benefits. These are public documents, and I urge those opposite to read them. In health alone the benefits will be between $2 billion and $4 billion per year. The NBN will pay for itself. That is per year in health alone.

We had the member for Wentworth talk about the lack of oversight of the NBN rollout. He has a short memory. He forgets that late last year one of the last things we did was establish a joint committee on the NBN, which will report on a six-monthly basis. Its membership will mirror that of the Joint Committee of Public Accounts and Audit. So to suggest there is no oversight of the NBN rollout process is a complete furphy.

I ask those here: why is it necessary for Australia to make such a substantial investment in broadband? Why are we going down this path? Because we had 12 years and close to 20 failed plans from those opposite, who still did not come up with a new plan over the break. That is why we are in this territory.

The member for Wentworth also mentioned people criticising the NBN. Yet again, I prefer to rely on the father of the internet, Vint Cerf, who called the NBN ‘a stunning investment’. He said:

I consider this to be a stunning investment in infrastructure that in my view will have very long-term benefit. Infrastructure is all about enabling things and I see Australia is trying to enable innovation.

For one of the world’s leading minds in technological innovation not only to call the NBN ‘stunning’ but to envy us for what we are doing is all the evidence I need that this project is worth backing.

I will address some of the other issues that the member for Wentworth raised regarding the amendments he foreshadowed. I find it absolutely incredible for him to walk in here and lecture us about freedom of information. The previous, Liberal government was in fact responsible for ensuring that a number of entities which were established were exempt from FOI requests. They include Medibank Private and the Australian Rail Track Corporation. These were both exempt from the authority of FOI. So to complain that NBN Co. lacks oversight and accountability also shows that the member opposite does not even understand the workings of NBN Co. as a company. It is plain to me that he is not aware of the provisions contained in the Commonwealth Authorities and Companies Act 1997, to which NBN Co. is subject.

As a Commonwealth company, under this act NBN Co. is required to submit financial reports, directors’ reports and auditors’ reports on all its operations. The Minister for Finance and Deregulation has the power to require interim reports. These reports must be tabled. Its directors are required to develop a corporate plan at least once a year. That corporate plan, for the information of those present, is now on its website. It is required to present this to the relevant minister. The simple fact of the matter is that the existing statutory structure allows for full scrutiny and accountability on the part of NBN Co. and its activities. This is not about accountability, just as the member for Wentworth’s pleadings about financial accountability were not about financial accountability at all. They were all about delaying.

I will also say, on the point of FOI, that it is not as though Mr Quigley, the CEO of NBN Co., has not been prepared to attend every Senate estimates hearing that has been relevant to NBN Co.’s operation. In reality, even if NBN Co. were not subject to FOI rules, it is certainly possible to use FOI rules for all the government entities dealing with it. It is entirely reasonable for NBN Co. to seek to protect from discovery certain information which is commercial-in-confidence. The other thing we need to bear in mind is that just because something is subject to FOI does not itself grant access to the documents being sought. I again make the point that there are mechanisms other than FOI to which NBN Co. is subject.

I will also address the issue of regulatory creep which was raised. What I will say is this: the notion that NBN Co. will seek to move beyond its status as a layer 2 wholesale-only service provider is something that I consider to be absolutely absurd. The amendments to the trade practices legislation in December and the government’s own statement of expectations make it clear that there is no expectation of anything other than NBN Co. being a wholesale provider of layer 2 ethernet. In fact, this is the very design that NBN Co. has been working to. It has not gone and designed a network whose architecture is based on anything other than layer 2 ethernet. So why on earth it would possibly want to go off and start doing something different from what it has already designed absolutely beggars belief. From the outset, over a year ago, I recall NBN Co.’s public presentations making it abundantly obvious that it wants to occupy the lowest tier in the stack, the lowest tier possible. That is reaffirmed by the statement of expectations.

I also want to say something about privatisation. It is interesting that the member for Wentworth thinks that the provisions in the bill regarding privatisation have been designed to make it impossible to sell. I find it absolutely laughable that those opposite come in here wanting to make it easier to privatise NBN Co. and remove the very sensible protections that have been devised for its privatisation. The people opposite are the same people who monumentally botched the sale of T2 and T3 in those massive fire sales for mum and dad investors, who all got burnt because it was simply an exercise in maximising revenue. The government will put in place a managed process, will act in the national interest and will not leave the stakeholders, the citizens of Australia, with a bungled sale. That is why we will ensure that parliamentary scrutiny is applied to the sale of the NBN.

There are provisions in the bill to ensure that the government plays an important role in the sale when it does sell down its interests. The important issue is that we step away from NBN Co. when the environment is right. The steps in this assessment include reference to the Productivity Commission. There is a parliamentary committee recommendation, and the minister will determine whether it is appropriate to sell down. Importantly, the finance minister will need to declare that favourable market conditions exist for a sale. This is critical. There is the ability to determine what is an unacceptable ownership or control situation. It is an important constraint on the ownership of NBN Co.

Why are these provisions here? They are here because they reflect NBN Co. as a national piece of utility infrastructure. No prudent legislature would allow its biggest piece of national utility infrastructure to be privatised without considering the potential future structure of the sector. That is what we are doing in these provisions. We are thinking about the role of government early in the process and the role of the private sector later in the process. It is a well thought out process for a transaction, not a quick flog. These are necessary measures to protect us from what the previous, coalition government did to Telstra, which had one of the most unproductive outcomes. These provisions will ensure that the sell-down process is managed and protected and does not just become a race to sell.

I will also address the issue of the so-called cherry-picking provisions that the member for Wentworth seeks to amend. Firstly, I note his concern that the provisions will put the brakes on private investment and that this undermines competition. My first response is that there is sweet little to put the brakes on in many parts of Australia, because of the failure of infrastructure based broadband competition, which necessitated the NBN being instigated in the first place.

It is at this point that I would like to raise the subject of a meeting I held. Last Friday, I held a street corner meeting with residents in Kellyville Ridge, in my electorate, who had consistently complained to me about their total inability to get broadband in this new estate. In this new estate, which is barely three years old, they are unable to get broadband or any signals in order for modern devices to function. Here is an example of some of the representations I have received from residents in this area:

I was interested to receive your letter regarding limited broadband access in Kellyville Ridge … I can’t make the meeting—

I will tell you about my meeting in a minute—

but fully support any progress you can make to improve service.

My wife and I … can only use wireless broadband and our mobiles from the front, upstairs balcony of our house.

I … have no choice on service provider …

He goes on to say, of the service providers they use for wireless broadband:

None of these work with any level of efficiency.

And this is important:

I find it extremely frustrating that in this day and age in Sydney’s largest growth area, we cannot access quality broadband/mobile service.

I totally agree with that constituent. And isn’t it interesting that when I hold a street corner meeting on a Friday afternoon in Kellyville Ridge, when I think it was still about 30 degrees, I had residents queuing up to ask me, ‘When is the NBN coming?’ and queuing up to tell me the problems they have in accessing broadband?

So, to the member for Wentworth, who came in here and started lecturing the House about why we do not need the NBN, I suggest he goes out and talks to those people. I suggest he tries to understand that there are parts of Sydney which have not benefited from infrastructure based competition, just as many regions of Australia have not benefited.

The bill is designed to address certain cherry-picking provisions. The non-cherry-picking provisions mean that anyone building a fibre network must provide wholesale access. Yet again, this is relevant to facilities based competition. The NBN will cover 100 per cent of the population, the vast majority of that being by fibre, and there will be differing costs of the network in different parts of the country. The ubiquitous nature of the NBN raises the issue of cross-subsidisation between high-cost and low-cost areas, and the imperative that NBN Co. can best cover the cost of services in higher-cost areas such as regional areas and the bush.

There is a very sound reason for this, something that only a ubiquitous fibre broadband network of the nature of the NBN can do: it can ensure equal pricing, regardless of where you live or work in Australia—equal pricing. Opposition to these provisions is opposition to equal pricing and the uniform national pricing requirement imposed on NBN Co. It means that the incentive to invest in purely lucrative areas will be diminished as a result of this bill. Again, this reflects the true nature of the network. It is one ubiquitous access network with internal cost-recovery mechanisms, it looks far more like a utility than a standard wholesaler and it is formulated to ensure that services in the bush are affordable and achieve NBN Co.’s mandate of uniform national wholesale pricing.

Indeed, these provisions are designed to counter inefficient investment. The NBN creates a national network where all players are created equal, and that equal treatment extends to whether they are in the city or in the bush. Those investors who seek to cherry-pick in low-cost areas do so for one reason: for profit. But, under the new arrangements in this bill, investment will be incentivised only where it is efficient. This is in contrast to the cherry-picker, the person who comes in not charged with a mandate to serve the national interests—unlike the NBN—but interested only in making a profit, and the easiest cherries to pick are in those low-cost areas, not in the bush and not on the outskirts of north-west Sydney.

In conclusion, I look forward to the debate that will arise later in this place. Before parliament rose at the end of the last sittings, I issued a challenge to members to go back and talk to the people in their electorates and listen to what they think about the NBN. I certainly did that. That is why I am able to stand here today and contribute to the debate on this bill in a positive manner. (Time expired)

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

I welcome the opportunity to speak on the National Broadband Network Companies Bill 2010 and the access arrangements bill, because the government is racing both of these pieces of legislation through the parliament in order to continue the rollout of its wasteful National Broadband Network. The companies bill is designed to outline the ownership, operations and legal status of the NBN, and outlines arrangements for its potential privatisation. The access arrangements bill amends competition policy laws to require the NBN to provide open and non-discriminatory access to retail carriers using its wholesale services. The bill also places similar rules and technical requirements on non-NBN fibre rollouts.

We are told that these bills must pass through parliament quickly so that Telstra can put its deal to shareholders and to enable the government’s $13.8 billion purchase of the wholesale copper network to go through. We know that the National Broadband Network will be the biggest government infrastructure project in Australia’s history. But it is also becoming clear that the NBN is the most unscrutinised infrastructure project in Australia’s history, and this legislation we are debating here today confirms the government’s intention to avoid scrutiny and analysis at all cost.

The NBN Companies Bill formally exempts the NBN project from the provisions of the Public Works Act. Exempting NBN Co. means that the Parliamentary Standing Committee on Public Works will not be able to conduct oversight of the NBN rollout. It is just another stage in Labor’s pattern of deception and avoidance of scrutiny at all cost. Just a few weeks ago, we had it confirmed that the NBN would be exempt from freedom of information requests—on top of the government refusing parliamentary scrutiny by a joint committee. We are going to have a sham committee established, which of course will not start its operations until the middle of the year—hardly the type of scrutiny that the taxpayer is entitled to, given the length, breadth and cost of this project.

So the parliament, the Productivity Commission and now the public are being refused any direct information about the project that the government does not wish to release voluntarily. If the government really intended to improve broadband services across Australia, then surely independent analysis would be the best way to ensure we had the right plan to provide the best services at the best prices available. The lengths to which the government is going to prevent potential criticism of this project are unprecedented. I have said before that any reasonable analysis of the government’s actions to avoid scrutiny suggests that Labor and NBN Co. have something to hide. They have a great deal to hide. As we slowly receive more information, as more legislation is introduced, as we continue to analyse the government’s unbelievable business case, it is becoming clear that the government does have a great deal to hide.

The big danger for taxpayers is the probability that we are seeing only the tip of the iceberg. Reports suggest that the Department of Broadband, Communications and the Digital Economy has been working around the clock to finalise its $13.8 billion deal with Telstra so that NBN can acquire the copper network. But the parliament is being asked to consider this legislation and to approve the safeguards legislation without the details of what the deal will contain. We do not know what the Commonwealth is gaining, we do not know what the liability of the Commonwealth to Telstra will be. There is just more and more hiding of the facts from the Australian people.

At the same time as we have that elaborate web of deception, we see that Telstra’s revenue from the copper network is declining rapidly. Deutsche Bank analyst Andrew Anagnotellis forecasts that Telstra’s half-yearly results are expected to show:

… underlying earnings before interest, tax, depreciation and amortisation will decline by as much as 12.5 per cent … as growth in mobile and data revenues is offset by the continued decline in its fixed-line telephony revenues.

So Telstra are experiencing big declines in revenue from fixed-line telephony, which are being offset by strong growth in mobile data.

Yet this government is in denial that revenue from fixed-line services is in decline and that the demand for wireless services is growing rapidly. Not only are they in denial but the NBN business case is modelled upon the basis that the growth in wireless services will dramatically decline. Wireless-only households currently account for 13 per cent of the market and these penetration rates have grown 225 per cent since 2003. Ignoring these trends, the NBN’s business case estimates that wireless-only households will increase to just 16.3 per cent by 2025. That is, despite the future release of 4G spectrum and the possibilities created by Long Term Evolution technology, the government believes that wireless penetration will only increase by a total of 25 per cent over the next 14 years.

The business case estimates that 12.4 per cent of households will not have a fixed-line connection and that 70 per cent will be connected to the NBN. This assumes that the growth in demand for wireless will slow and that more households will choose to access fibre services. Yet less than one year ago, the minister recognised the growth in wireless services. The minister told the AMTA in March last year: ‘Looking to the future, in terms of demand for wireless broadband, it looks like there will be exponential growth for some years to come.’ Why isn’t it in the business case if there is ‘exponential growth for some years to come’? Now forced to sell the NBN during and after the election, the minister is arguing that wireless is no longer a substitute for fibre, but the statistics show that there is exponential growth in the number of households substituting wireless for fixed-line services.

What does this say about the market? What greater feasibility study does the minister need than the market’s comparative growth between fixed-line services and wireless services? He only needs to look at the market in relation to young people, the consumers over the long term and into the future. They want the freedom of wireless devices. They do not want to have to plug into the wall when they want to operate their devices. They want the freedom; they want high-speed broadband where they are. They do not want to have to plug into the wall.

On Monday of this week, the company Vividwireless were testing download speeds for their 3G spectrum using new technologies soon to become available to customers. The tests undertaken by Vividwireless achieved peak download speeds of 128 megabits a second, which is faster than the 100 megabits a second apparently available under the NBN. These speeds and opportunities will only increase with the release of 4G spectrum. The government is simply denying that these technological advances will exist and that customers will substitute them for fibre.

Unlike this Labor government, other countries are not in denial about their broadband policies. India is following a plan to connect 60 million customers—almost three times the population of Australia—to wireless broadband, offering speeds of about 100 megabits per second at a fraction of the cost of the NBN rollout. In the United States, President Barrack Obama announced in his State of the Union address just two weeks ago that he will be investing in wireless technology to provide high speed broadband to 98 per cent of the American population over the next five years. President Obama said in June last year:

… we are now beginning the next transformation in information technology: the wireless broadband revolution …

He continued:

Expanded wireless broadband access will trigger the creation of innovative new businesses, provide cost-effective connection in rural areas, increase productivity, improve public safety, and allow for the development of mobile telemedicine, telework, distance learning, and other new applications that will transform Americans’ lives.

Yet the Gillard government is refusing to even consider the possibility that technologies such as wireless can compete with a fixed-fibre network. The government is in denial and that denial is going to cost $50 billion.

The coalition believes that it should not be the government’s intent to push one technology over another. The coalition believes that we should be using competition to determine the best outcome. But this government is systematically trying to prevent competition through its monopolistic fibre network. By decommissioning Telstra’s copper network, they are destroying a valuable asset that currently provides high-speed broadband at acceptable speeds for many people around the country. They will also prevent Telstra and Optus providing competition through their HFC network, which can deliver 100 megabits per second using DOCSIS 3 technology, and that currently passes 2.9 million homes. Why would you bypass an existing technology that will service, or potentially service, one-third of your market and just junk it, effectively, just ignore its existence and overbuild and duplicate that service at great cost to the taxpayer? And today’s legislation further entrenches the NBN monopoly by forcing other fibre owners—potential competitors—from offering services at different levels to those provided by the NBN. The bill forces people to provide access for level 2 bit stream services.

But the real concern in this is the viability. The business plan is an elaborate deception. There has been much talk about the IRR of seven per cent and we see the government crowing about the fact that the seven per cent IRR is going to provide an appropriate return to government to cover the cost of the interest payments on the debt. Let me tell you that the reality is that the majority of the value contained in that IRR of seven per cent does not come from the marginal income derived from spending $35.7 billion on fibre. It actually comes from the existing copper network. That is where the value is. They are going to spend $35.7 billion and get marginal revenue for a typical subscriber equivalent to the value of about a cappuccino a month.

The reality is that any company director that was going to acquire the Telstra copper network and effectively abandon it and then spend another $35.7 billion to overbuild it would probably be thrown in jail for destroying shareholders’ funds, because the marginal IRR of the additional expenditure over and above the copper network is actually negative. It is a negative IRR on the marginal funds invested, which is the appropriate analysis. It is in fact the copper network that is buttressing the business case, not the value generated by the fibre network. You will actually see a massive capital loss to the taxpayer. For the Australian people there will be an incredible opportunity lost, an opportunity forgone, through investing $35.7 billion to gain only a marginal revenue per subscriber of around a cappuccino a month. It is a pretty stark figure: a negative marginal IRR and a loss to the taxpayer for the benefit of a service that many people would want to use over wireless.

Just today the Economist Intelligence Unit released their report on broadband and it said that, out of 16 developed countries, despite spending the $50 billion, the Australian National Broadband Network would still be ranked 10th. One of the major arguments for the NBN is to make us roar up the rankings and to make us top tier in relation to the internet. The government are going to blow $50 billion, they are going to make a massive capital loss and, at the end of all of that, we are still going to be ranked 10th.

It is interesting to see who was ranked No. 1. It was South Korea. It is interesting to note that in South Korea there were 24.84 million households who have subscribed to wireless. How many do you think would have subscribed to their version of the NBN? If 24.84 million households in a country that is ranked No. 1 in the world for broadband have subscribed to wireless, is it 30 million households? Is it 40 million households? The fact is that in South Korea, according to the reports given to me, only 11.6 million households have subscribed to fixed line services—less than half. This is the flagship country that is quoted by Senator Conroy as being a leading light. Less than half the households are actually connected to a fixed line service as compared to mobile wireless. What we see is that the NBN project is a massive illusion. It is a political fraud. It is an economic fraud on the Australian people. We will see a massive destruction of value. We will see a massive capital loss.

We have debated in this House in the last two days the terrible floods and the natural disasters that have occurred around the country. Many of the losses and the impact of those losses on the Australian economy have been chronicled in this place. When you look at the sort of capital loss we are facing by investing $35.7 billion to receive a negative internal rate of return, the capital loss that will be imposed on the taxpayer as installed by this bungled and wasteful project is going to make the losses to the Australian economy as a result of these natural disasters seem cheap, because we are facing a massive capital loss. The marginal revenue on the $35.7 billion does not justify the additional funds invested. It is a loss that will be borne by the taxpayer to try and prop up Labor’s failed political project.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

It is a very courageous representative for regional Australia who comes to this place and defends Telstra’s ageing copper wire network as the Rolls-Royce that is going to drive us into the 21st century in technology. I suggest he give that speech in his electorate somewhere because I know for a fact that there are parts of that electorate where on a damp day if you spill your drink you will lose not just your broadband connection but your telecommunications connection altogether. I suggest that the member for Cowper go out to some of the more remote parts of his electorate and give the speech he has just given. Go out there and defend the copper wire network that Telstra currently runs and see the response that he gets from his constituents.

I have had the benefit of sitting in and listening to the speech by the member for Wentworth on the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2010. He has the toughest job on the opposition front bench because he has been seen out there day after day championing a cause that he simply does not believe in. He is championing a cause to bag and hopefully kill a visionary policy, a policy long overdue, to roll out for the first time in our nation’s history a fast, reliable broadband network to every Australian household and business.

There are only two reasons why he has been sent out there to oppose this policy and to oppose the NBN. The first is that his boss only knows how to oppose things. He has not got a positive policy, as the member for Greenway has pointed out. He does not have a positive policy in any area, let alone in relation to broadband. The second reason is that the market fundamentalists, those who champion the cause of the market for everything it would seem except for tackling climate change, when it comes to economic theory, have a huge economic blind spot to market failure. We know that the need to build the National Broadband Network arises from the fact that after 20 years and, as the member for Greenway pointed out, after nearly 20 failed broadband plans we have a market failure of tragic proportions.

The only answer for this is for the government to intervene and ensure that we have a fast, reliable, high-speed broadband network which is available on a universal basis to 100 per cent of Australian households and businesses. So it is with great pleasure that I rise to speak on the National Broadband Network Companies Bill 2010, a bill that, together with the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2010, will enshrine in legislation some policy and governance arrangements for the operation of the NBN Co. to reflect the Gillard government’s historic commitment to build and operate a superfast, fibre-to-the-home telecommunications network. The National Broadband Network Companies Bill will limit the operation of the NBN Co. to wholesale-only telecommunications activities and it sets out the Commonwealth ownership arrangements, including providing for the eventual sale of the NBN Co. following the completion of the project and the approval of parliament. The legislation will lock in the obligation on the NBN Co. to offer wholesale-only services on open and equivalent terms to all service providers. This measure alone will guarantee a level playing field for all service providers—something that we have not seen since the deregulation of the telecommunications industry in 1991. In the history of telecommunications policy in this country, these bills are particularly significant because they deal with the structural problems that have been at the heart of so many failed broadband plans of the previous government.

The measures in the bill will do the following things. They will define the NBN Co. to include NBN Tasmania and any other company that NBN Co. controls. They will limit NBN Co. to wholesale-only telecommunications activities. They will establish powers to enable functional separation, and transfer or divestment of assets. They will enable the minister to make licence conditions, including to require or prohibited NBN Co. providing specific services. They will require the Commonwealth to retain full ownership until the NBN is built and fully operational. They will require a Productivity Commission and a parliamentary committee review prior to any sales process, and that parliamentary committee, as the member for Greenway pointed out, will inquire and report to parliament on a six-monthly basis on the operations of the NBN and the rollout process. The bill will establish the framework for the eventual sale of NBN Co. and establish regulations to be made to set limits on private control of NBN Co. following privatisation. It will also establish reporting obligations and exempt the NBN Co. from the Public Works Committee Act 1969.

Much has been made about the change to the bill which means that it is no longer a requirement set out in the legislation that the NBN Co. is to be sold within five years of being declared built and fully operational. Even though the stipulated five-year period would have allowed some flexibility for the government of the day to complete the delivery of the project through the sale of the NBN Co., it is also entirely appropriate to now leave it to the parliament of the day and the government of the day to make this judgment as to the sale and the timing of that sale.

The Gillard government is embarking on this nation-building infrastructure project as an investment in Australia’s economic future. It is very disappointing indeed that the member for Wentworth, the member for Cowper and all those opposite appear to have a total failure of imagination when it comes to understanding the economic potential that this project will deliver for this country. The problem for the shadow minister is that the Australian people can clearly see the benefit of the NBN and what it will deliver for them, even if he cannot.

In this regard I note that the shadow minister for communications paid a visit to the South Coast of New South Wales recently. He drove through my electorate and spent some time with the good residents of the electorate of Gilmore, taking the opportunity to make some of his spurious claims about what the NBN will and will not do. A leading local newspaper, the Illawarra Mercury, quite astutely was not fooled by any of Mr Turnbull’s ridiculous claims. I would like to read from an editorial of the Illawarra Mercury on the day after Mr Turnbull’s visit to the Illawarra. It goes under the heading ‘Mr Turnbull’s internet plan short-sighted’ and it says:

MALCOLM Turnbull is off the pace if he thinks the Australian people will accept a tiered system of broadband connection in which regional and suburban residents are treated as second-class citizens.

The Opposition’s communications spokesman was a long way from Vaucluse when he dropped in at Barrack Heights yesterday to talk all things NBN with some of the Liberal faithful.

The Liberals’ opposition to the National Broadband Network hurt them at last year’s election but Mr Turnbull is doggedly sticking to his line that Labor’s plan is overpriced and unnecessary. While he advocates improving internet access to those areas where it is poor, in his view town centres should get a super-fast internet connections at 100 megabits per second, while those logging on in the ’burbs are forced to settle for a slower rate.

Even if the average residential user of the internet doesn’t need a 100 megabits per second connection at the moment, Mr Turnbull’s plan lacks vision. The internet is used in ways unimagined just a few years ago. No-one, including the Liberal Party, can predict what new uses are around the corner.

And whether they need the speed or not, no-one likes the idea of being lumped with a B-grade option.

I think the editor of the Illawarra Mercury has really belled the cat in that well-crafted editorial.

The people of the Illawarra were not taken in by the shadow minister’s misleading assertions about the NBN project, nor his claims that if the coalition’s OPEL broadband plan had continued then just about everyone in this country would by now be enjoying access to broadband. The coalition now claims its defunct OPEL project would have extended high-speed broadband out to 99 per cent of all households and small businesses. This is delusion on a grand scale. The OPEL plan was in fact meant to reach 90 per cent of just half a million underserved premises, which is less than five per cent of all premises in Australia.

That is not a point that the member for Cowper will be out spruiking around his electorate. I suspect the member for Wentworth was not out there sprouting that when he visited Gilmore the week before last either. But this very low-ball plan failed even to reach that coverage objective. Instead, independent analysis showed that, if it had proceeded, it would actually have covered fewer than 380,000 premises; that is around 3.5 per cent of premises, or 72 per cent of the low-ball promise that they made to the electorate. It was just one of 19 failed broadband projects the coalition put up, and it is time that we all moved on from these failed plans.

I live very near the trial pilot rollout site in Kiama Downs and Minnamurra, and it is exciting to see those trucks rolling the cable through the suburbs. Transformational projects of the magnitude of the NBN do not happen overnight, and they certainly do not happen every day in our region, but it is pleasing to know that steady progress is happening every day. In one of the first release sites in Kiama Downs and Minnamurra, which is adjacent to my electorate of Throsby, the take-up of the NBN is proceeding at extraordinary levels, as is consent to fibre connection to the premises—and this is important. Households were invited to preselect, if you like, whether they would like to get the NBN connected to their premises, and over 75.9 per cent of premises in Kiama Downs-Minnamurra have signed up to that, indicating that they want to get high-speed broadband from the NBN retail providers connected to their premises, which just shows that there is a lot of excitement in the local region for this project. Transfield, the local construction company, in its first release site has completed the majority of the passive infrastructure for the underground deployment despite very poor weather conditions—although we will not complain about that given that we are a long way from the floods of Queensland, northern New South Wales and northern Victoria.

Some issues to do with the laying of cables will arise during this rollout process. I believe it is important to keep our focus on the big picture here. The network is expected to be activated progressively, with live services becoming progressively available through retail service providers in the coming months. It is great news for the Illawarra and it is my intention, together with my colleague the member for Cunningham, to do everything that I can do to work with local councils in the region to encourage NBN Co. to roll out the NBN into the high-population centres north of the first release sites and eventually to Wollongong and the entire Illawarra-Southern Highlands region.

As you can see from the quotes I read out from the editorial in the Illawarra Mercury, this has the support of the entire region. Regional Development Australia Illawarra is very, very keen. This is a body made up of business leaders, government agencies both state and federal, unions and local government representatives. It is very, very excited about the prospect of getting the NBN rolled out into the Illawarra, because we can see that the 67 per cent of small businesses in the Illawarra and the Southern Highlands which are home based will benefit enormously from this project. The 20,000 people who daily make the trip from the Southern Highlands of New South Wales or from the Illawarra to Sydney in search of work or for employment might be able to spend a little bit more time off the train platforms and in their communities, because they will be able to telecommute or work in the new businesses that will grow up around the NBN—the much-needed new businesses in the Illawarra. So I commend the bill. It is an exciting project and one that the entire community is behind.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2010. As I said when I first arrived in this place, the NBN Co. proposal is a grand promise produced to generate votes regardless of the real cost to taxpayers and regardless of the typical Labor shambles this monopoly will create. Yes, Australians will benefit from the provision of high-speed broadband across the nation; nobody disputes this. What is completely outrageous, however, is Labor’s claim that high-speed broadband can be produced only by an outdated, monopolistic telco model such as NBN Co.

The National Broadband Network Companies Bill before us governs the ownership, operations and legal status of NBN Co., Labor’s builder and operator of the broadband network. It limits NBN Co. to business activities directly related to supplying wholesale communications services and sets out some arrangements for its eventual privatisation. The telecommunications legislation amendment bill, on the other hand, amends the Competition and Consumer Act 2010 and the Telecommunications Act 1997. It requires NBN Co. to provide open and non-discriminatory access to retail carriers using its wholesale services and imposes similar access rules and NBN-compatible technical requirements on non-NBN fibre rollouts.

But it seems the government is intent on being blindsided. It is determined to build an enormously expensive, outdated telco monopoly model that will lack flexibility and management capacity to adapt to changing times and changing technologies. Its eyes are wilfully closed to sensible, market driven alternatives such as Brisbane City Council’s i3 project. Some would ask why. Why is Labor so blinkered? Perhaps because its politics gets in the way. More to the point, this is a program crafted and controlled by Labor mates, and we all know about Labor mates in my home state of Queensland.

We know this government is in crisis mode. Its promises are broken day by day, one by one, and broadband and the NBN are no exception to this. This government asks the community to trust it, but its record in government is that trust and the Labor Party are two separate and non-compatible planets. This government refused to publish a business plan for months on end and then produced a document that highlighted that it would cost taxpayers even more than its early estimates. The Gillard government estimates that NBN Co. will require around $27 billion in equity funding and will need to borrow a further $10 billion to roll out the network. In addition, if the NBN Co.-Telstra deal currently under negotiation is completed, NBN Co. and the government will make payments to Telstra worth $11 billion in present-day post-tax terms, equal to approximately $16 billion in actual transfers, for use of its conduits and migration of its customers. The commonly used $50 billion price tag for the NBN adds these sums—equity, debt and payments to Telstra—together. It is far too much and, quite simply, does not need to be anything like this amount.

Perhaps what is most alarming is that fibre can offer download speeds of up to one gigabit per second—1,000 megabits. However, in 2020 the NBN Co. business plan forecasts that two-thirds of users will pay for speeds no higher than today’s top ADSL speeds of 25 megabits per second over Telstra’s existing copper network. Fixed wireless and satellite download speeds will be around 12 megabits per second. This is yet more damning evidence of Labor’s NBN Co. charade. They are indeed giving us a B-grade option.

The coalition has proposed amendments to Labor’s bills to highlight the misguided nature of their agenda. We must ensure that NBN Co. remains legally defined as a public authority and remains subject to the full oversight of the Public Works Committee Act. Supporting our amendments will ensure this. The coalition amendments will also ensure that it is specified in specific language that NBN Co.’s supply of wholesale communications services be restricted to layer 2 products provided to retail service providers for the purpose of providing services to end customers. They will also strike out exemptions to the wholesale only rule for NBN Co. deals with utilities.

Along with my coalition colleagues, I am very concerned about several elements of Labor’s bill. This bill will prevent appropriate parliamentary and public scrutiny of NBN Co. Labor has always been determined to hide the real facts, and now they are determined to achieve it. At a time when we need to tighten our belts and rebuild devastated communities across the country—importantly, in my home state of Queensland and my electorate of Ryan—the government should engage with some of the many reputable companies providing broadband solutions in many countries throughout the world, including companies like Huawei, who have recently launched their Connecting communities white paper. This paper is an independent review of the impact of broadband communities in Britain and also for Australia. The report identifies significant health, education and environmental benefits of ever faster broadband in UK communities. Importantly, it shows that this can be achieved through private enterprise and without government made monopolies.

It was interesting to learn about their report and their experiences in the United Kingdom, where they are working to deploy the 21CN network. Huawei are also building next-generation broadband networks in Singapore, Malaysia, the UAE and Brunei. And, as I have previously mentioned in this House, the Brisbane City Council, through the leadership of Lord Mayor Campbell Newman, is introducing the i3 project. This project will provide residents and businesses with superfast optic broadband within four years at no cost to the ratepayers. It may even deliver a return to Brisbane ratepayers.

Australia cannot afford to waste $43 billion on this project when we have private enterprise prepared to do it for considerably less and to provide open access, encouraging competition and flow-on cost benefits to the consumer. It may be easy for the Gillard government to hit the taxpayers, but it is smarter to use established, well-credentialed private sector providers who have the skills and innovations to deliver these types of projects. The private sector is better placed to create investment and to drive efficient delivery of infrastructure.

The NBN will be the largest public works project in Australia’s history and, most alarmingly, the government has already rejected calls for it to be subjected to a cost-benefit analysis by Infrastructure Australia or review by the Productivity Commission. The question has to be asked: what are Minister Conroy and the Labor government trying to hide? In addition to this, only 160 pages of the 400-page NBN Co. business plan were made public. To top it off, the Labor government—shamefully—asked members of parliament who viewed the whole business case to sign confidentiality agreements. The NBN Co. is a monopoly, and the Gillard government intends to legally prevent any fixed line competition. How on earth can its business plan be commercial-in-confidence? This is just further evidence of a government that, to use Prime Minister Gillard’s words after she knifed the member for Griffith, has ‘lost its way’.

It concerns me greatly that this bill will seek to have the NBN Co. defined as a corporate body rather than as a public authority, thus exempting it from FOI laws. This is despite the fact that the NBN will be 100 per cent owned by the Commonwealth. This is not productive and furthermore does not provide the Australian community with any assurance that the government will not once again waste its money or that the government will even be accountable.

This bill, most worryingly, attempts to remove the NBN Co. from the oversight of the Public Works Committee Act 1969. Major government infrastructure projects have been subject to joint parliamentary committees since Henry Parkes introduced reforms in New South Wales in 1888 to end corruption. Apparently, that no longer suits the agenda of the Gillard government. Even the Snowy Mountains scheme was subject to extensive oversight by the federal, New South Wales and Victorian parliaments. But Labor wants its NBN Co. charade to go under the radar.

The coalition’s amendments also seek to ensure that ministerial directions to NBN Co. regarding NBN Co. asset transfers or divestiture, or regarding the provision or nonprovision of services, are subject to disallowance by the parliament. This is justified, given the government’s track record of attempting to prevent scrutiny and oversight of the NBN Co. to date.

This bill may also hurt private retail service providers by allowing the NBN Co. to extend its mandate. When the National Broadband Network policy was devised, and NBN Co. was set up, the Labor government assured the market that it would only provide a wholesale layer 2 bit-stream service to retail service providers, and would not deal directly with end customers. But the restrictions placed on NBN Co. in this bill are unclear in some places and unduly expansive in others. For instance, the NBN Co. will be able to supply network services directly to gas, water and electricity utilities, transport operators and road authorities, even though provision of such services to these entities is an existing and valuable business opportunity for Telstra, Optus and other carriers.

The bill does not specify in clear language that NBN Co. must limit its products to layer 2 services supplied to retail service providers for the purpose of providing services to end users. This concerns me greatly. This bill will also stop competition by preventing private competitors from entering the market. It is like giving all our roads to Ford and allowing them to regulate which cars can use the road.

The so-called level playing field provisions, or cherry-picker provisions, will mean that any company building a new network offering services of 25 megabits per second or higher will have to meet the same technical standards as NBN Co., make available the same basic layer 2 wholesale services as NBN Co. and allow competitors non-discriminatory access to their networks at prices set by the ACCC. By mandating prices and reducing returns, this will prevent private investment in new networks that could otherwise lead to many Australians getting faster broadband much sooner than if they wait for the NBN. It also stifles innovation in the telecommunications sector by mandating which technologies must be used. Yes, this is typical Gillard Labor, but it is simply not good enough when so much money is going to be wasted.

The coalition remains committed to the policy objective of providing all Australians with high-quality affordable broadband regardless of where they live. This means greatly improving services in regional and remote Australia and in the black spots that stop around one million premises in the cities from getting good connectivity. We have never walked away from this and never will. Furthermore, pouring $50 billion into the NBN at a time when reconstruction after natural disasters and a once in a century mining boom are desperate for resources and the economy is near full employment is a guaranteed way to ensure taxpayers do not receive value for money.

The Gillard Labor government has attempted to prevent parliamentary scrutiny and oversight of the NBN at every turn, even though taxpayers are funding the entire project. It is simply not good enough and the government stands condemned. To make matters worse, the government is now attempting to tie the hands of future parliaments by placing unreasonable impediments to a democratically elected future government choosing to pursue a better policy course for broadband. This is deeply reprehensible.

Given that the NBN is being rolled out and NBN Co. now exists, the coalition is moving these amendments to restrict its scope of operation to ensure it does not fall victim to the ‘mission creep’ that often infects public monopolies. Attempts to hinder parliamentary or public scrutiny of such an expensive and risky project are not reasonable and should not be supported.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I rise to oppose the amendments and support theNational Broadband Network Companies Bill 2010. I do understand that the member for Ryan was not a member of the parliament when the Howard government was in power, but I would like to remind her that the proposal that was put out by the then Howard government would have totally and absolutely disadvantaged the people of my electorate of Shortland and condemned them to second-class broadband internet access. The member for Ryan has put forward quite a misleading contribution in this debate and does not tell the full story. This is very much in line with a lot of the propaganda that has been put out by the coalition on this legislation. I think it is really important to state that the NBN, high-speed broadband, is absolutely about the future. The countries and communities that have it will be the countries and communities that have the opportunities of the future. It is the same as electricity was when it was first introduced. It is groundbreaking technology and something that each and every community should be fighting very hard to have access to.

The legislation before us today limits the focus of NBN Co. to wholesale-only telecommunications activity, consistent with its mandate, sets out the Commonwealth ownership arrangements and provides for the eventual sale of the Commonwealth stake in the NBN. The bill delivers on the government’s commitment to regulate the NBN so that it operates according to the principles that the government has set for it. It will be wholesale only, offering access on open and equivalent terms, and be subject to transparency requirements and ACCC oversight—something that the previous member did not share with the parliament. As a wholesale-only operator, it will not be conflicted by selling downstream retail services in competition with its customers, as has been the case with Telstra. As such, it will provide a fair and stable platform for retail competition. The eventual sale of NBN Co. will be subject to processes that will give the Productivity Commission and the parliament an ability to look into the impact of the sale and the appropriate regulatory framework needed for it to proceed. There will be scope for the parliament to disallow the sale of the company.

I have been associated with a joint Hunter-Central Coast RDA NBN priority rollout project. This joint project has been working with the business communities of the Hunter and the Central Coast and 13 local government areas—two on the Central Coast and 11 in the Hunter—to develop a cooperative approach to NBN Co. and its rollout contractors. The two Central Coast councils have all passed resolutions in their council chambers supporting the proposal, and it is my understanding that Lake Macquarie Council, which is the other council that falls within the Shortland electorate, will be passing a motion next Monday evening putting its support behind the project. This is about local councils working together cooperatively to identify appropriate corridors for cable rollout; to identify new developments for inclusion in the NBN infrastructure; to assist contractors to minimise and manage the disruption to local communities; and to develop the capacity of the regions to provide the skilled labour required to carry out the rollout functions.

There have been meetings of all Hunter and Central Coast members. In addition, there have been meetings that I have been involved in with Central Coast members and some of my Hunter colleagues. This is about a cooperative approach, which I think in itself is unique. It is about the two regions of the Hunter and the Central Coast working together to see that our regions benefit from the NBN rollout. It is all about being prepared for that. It is about having the capacity and it is about cooperation. It is very important.

I will lay on the table the importance of the NBN to the Shortland electorate. The Shortland electorate takes in part of the Central Coast and part of Lake Macquarie. They are areas where most people have to travel to work. It is an area of some size and the NBN will be such an advantage to the people of the area. People will be able to work from home. It will make that distance factor negligible. It will help with education. Another important factor is that the people of the Shortland electorate have the skills and the expertise to embrace the NBN rollout. As part of the joint Hunter-Central Coast NBN priority rollout, the people of the Shortland electorate are ready to go and are asking that their proposal be viewed sympathetically.

Another aspect that makes it a very important region to be looked at favourably for the NBN rollout is the Smart Grid, Smart City project based in Newcastle. There has been an investment of $100 million by the government in that trial project. One important aspect of that project is to have fast-speed broadband. When it is developed to its fullest and is available to communities throughout Australia—and I know there is a trial project in Newington in Sydney—people on the other side of the world will be able to operate their appliances and will be able to turn their security lights on and off. It is giving people access to utilities that they have not had in the past. This is energy efficient and cost saving and is something that should be embraced not only in the Hunter, Central Coast and Sydney areas but throughout Australia. All Australians should have access to this facility and fast-speed broadband will deliver it to Australians.

With the Hunter-Central Coast project, the RDA is focused on providing data that will be relevant to the NBN. It will play a vital role in ensuring that the region’s approach is consistent. I think that is really important when we are looking at the NBN rollout. It is also important to note the expertise in both areas. What I feel is very special about this joint RDA Central Coast-Newcastle project is the way businesses on the Central Coast have hopped on board and made such an enormous commitment to it. They have a coordinating broadband group, which includes members from Gosford, Wyong, the Hunter and the Central Coast, and there is business and community representation. Businesses on the Central Coast have joined together and have been extremely supportive of the proposal. Businesses on the Central Coast have given me the strong message that they are ready—they are NBN-ready—and they are very keen to see the NBN rolled out through the Central Coast and through the Hunter. They are committed to the joint approach. On the other hand, the Central Coast is putting together and making sure that business and the Central Coast community are on board, and I have been overwhelmed by the way the community there has come together to support the project.

Similarly, the Lake Macquarie Council, as with the Wyong Council, has offered to open up its infrastructure plans and to work constructively with NBN Co. to ensure that rollout in that area proceeds smoothly and that there are absolutely no hiccups along the way. It is a highly skilled council which has excellent knowledge in the area of data transfer. The council is committed to working as part of this joint RBA rollout to ensure that the area and the people of Lake Macquarie can benefit from this joint project.

The project across the Hunter and the Central Coast has now been going for over 12 months. As I said earlier, it is about cooperation, capability and ensuring that the ministers and NBN Co. are aware of just how ready our areas on the Central Coast and in the Hunter are for the rollout to take place. On the Central Coast, David Abrahams led the push from the business community. He worked with councils across the Central Coast, meeting regularly to discuss how our area could benefit from and be ready for the next round of the broadband rollout. Being NBN-ready is really important, and the Hunter and the Central Coast are.

Another proposal that the Hunter and the Central Coast link into is the National Broadband Network, spanning Australia’s eastern regional corridor. I would encourage people to have a look at the proposal the Southern Cross University put together. I congratulate the member for Page, who was involved in that as well. It talks about the benefit of creating a spine along the eastern coast of Australia and about the reasons that area should be a priority. Once again, it talks about the Hunter and the Central Coast joint proposal.

This is good legislation. This is legislation about the future; not legislation about the past. This is legislation that will deliver not to a few Australians but to all Australians, and it is legislation that should be supported by all members of the House.

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I am grateful for the opportunity to rise to speak on the National Broadband Network Companies Bill 2010. Listening to the contribution of the member for Shortland highlights why we in the opposition have grave concerns about the idea of a massive, legislated government monopoly being able to do the job that the market could do, and probably should do, in this instance. If it were up to the member for Shortland, for instance, we would pass a motion that Lake Macquarie council send out a few council workers and all of our problems in life would be fixed!

The story of Australian progress, ingenuity, innovation and risk and return is that of the market and the operation of the market. In Australia today, most Australians access the broadband that they want and that they need at a reasonable price. The economy has developed to a point where most businesses access the broadband that they need and that they want at a speed that suits their business. Of course, what government is for is to deal with those situations that the market cannot, a concept that seems to be totally foreign to those opposite in this legislation before the House. This bill is not to deal with black spots in major cities. This is not a bill to deal with rural and regional areas that cannot be funded by market risk and return. This is a bill to create a massive government monopoly across the entire country, to 10 million homes.

The member for Shortland spoke about the ACCC. The provisions of this legislation effectively cripple any form of competitive tension or process in this market space until its eventual privatisation—and I will get to that in a minute. What this bill will do is mandate that you cannot compete. Prices will be regulated. Technology will be regulated. Let us go over that one more time: technology will be regulated by this bill. You would dare not invest your capital in a new form of emerging technology in broadband provision because there would be a massive government monopoly which says you must maintain a technical standard equivalent to the National Broadband Network. What the legislation is doing is effectively putting a lid on innovation, on advancement in technologies.

When we see articles from the United States, we see that President Obama—and this is something which those opposite should take careful note of—is talking about innovative, forward-looking wireless solutions. I am not simply talking about wireless solutions. But he is talking about new technologies and the advancement of a modern economy. I regard Australia as a modern economy that should be allowed to advance. Investment should be encouraged in broadband, internet and other technologies to allow new and emerging technology to flourish. Jeffrey A Eisenach wrote an article in the Australian last week highlighting three differences between Obama’s plan and the National Broadband Network. He says:

The most obvious difference is that the NBN is focused almost exclusively on fibre, while Obama spoke of deploying “high-speed wireless”.

…            …            …

A second … difference is that the Obama administration’s broadband plan depends almost entirely on private funding. While the NBN will cost Australian taxpayers about $36 billion …

He then points out that Obama’s whole stimulus plan was only about US$7.2 billion. Jeffrey Eisenach then points out, and this is what I want to highlight:

The third, and perhaps most profound, difference lies in the US decision to let technologists and markets, rather than politicians, choose the most efficient technologies.

Listening to the contribution of the member for Shortland, I am reminded why we would allow technologists and businesspeople to make these decisions rather than politicians. When I hear the contributions of those opposite I am reminded that the expertise in this House in terms of the broadband provision is of such a low level that the pontificating remarks of government members about the technology in this bill amount to very little. They really know very little about the provision of infrastructure in this National Broadband Network—how to do it effectively and what it requires to provide for, in a commercially acceptable way, the needs of the market in Australia today.

Today we have seen that the National Broadband Network will cost taxpayers 24 times as much as South Korea’s and deliver just one-tenth the speed. I am not simply raising these concerns to say, ‘This will be a total disaster and it is a pie in the sky’. I think these concerns are valid, because the structure of the government’s bill and the structure of what the government is doing in the Australian marketplace is taking what is a reasonably working, effective market based system and turning it into a massive government monopoly underwritten by the taxpayer. That is a key concept: it is underwritten by the taxpayer. That is a big risk.

The government refers in this bill to the ‘eventual privatisation’ of this asset. It is acknowledging that it is probably a worthy goal to allow the market to recommence provision of broadband in Australia one day—one sunny day in the future. The government is acknowledging that one day, when this government is well out of office, it will be a good idea to privatise it. Maybe it will be Bob Hawke or Paul Keating reincarnated going on a privatisation splurge, but not this government. This government says it is the government’s role to take the risk on behalf of the Australian taxpayer, to put people like the member for Shortland in charge of national broadband network policy, not the experts, the technologists and the business investors, the people who make these decisions every day for a living. That instinct in the Australian Labor Party is completely and utterly foreign to me, and I think it is foreign to the success of the Australian market and our emergence as a modern and dynamic economy.

We have proposed a series of amendments to this bill and I support these amendments. I think at a minimum we can try and make a bad bill better. I think these amendments do that. If you are going to accept that the government will be the single biggest provider of this technology and this service to the economy, you must have the appropriate scrutiny—not ‘should’, not ‘could’; you ‘must’. If you are asking the taxpayer to take the risk on $36 billion of infrastructure investment, then you must have proper scrutiny of this massive government asset. But what we have seen from this government is a continual attempt to evade scrutiny on this, the biggest single investment in Commonwealth history. We have seen a continual attempt to evade the opposition’s comments that we should have the highest levels of oversight on this particular asset. This is a warning to the future. Without the highest levels of oversight, of government scrutiny, on the biggest single investment in Australian history, you will have very unsatisfactory outcomes.

We have seen their evasion of the proposal to have a review by the Productivity Commission; yet ironically this legislation calls for a review by the Productivity Commission. When we get to that one sunny day when the Labor Party says it is now a good time to privatise the asset, we will call in the Productivity Commission, but not before we ask taxpayers to take on the risk of this massive single monopoly, the biggest investment in Australian history. If this sounds like a compelling argument to anybody out there, this is a compelling argument. It is no good to the Australian taxpayer to call in the Productivity Commission when attempting to privatise this asset in the future and not have them look at it now. If you can sense a little outrage in my voice, I can tell you that I am against big government monopolies when we do not need to have them.

This bill restricts the ability of anybody to invest in the future of broadband provision, and that is another one of my great criticisms. Finishing on that scrutiny point—my colleague the member for Ryan raised this point quite accurately—the NBN Co. will be removed from critical pieces of government legislation designed to provide an adequate level of scrutiny, such as the Public Works Committee Act 1969 and, of course, freedom of information laws. These are tenets of our democracy, things that make us Australian and democratic, unlike many of the countries we see deteriorating around the world. This big government monopoly, funded to a level that has never in Australian history been sought from the public purse, will not be subject to key scrutiny pieces of legislation like the Public Works Committee Act and freedom of information laws. It sounds awfully bad for the Australian taxpayer. It sounds like somebody is trying to hide the level of risk. And you wonder: why the rush to evade all of this scrutiny?

Our amendment seeks to prevent the damage that will be done by the so-called level playing field provisions, or what is termed the ‘cherry-picker provisions’. I have spoken to people in the market space and I have read contributions from voices such as the Alliance for Affordable Broadband who have a lot of common-sense things to say about what you need to do and what kind of structure you need to have in your legislation to ensure that you do not stifle innovation in this space. Governments do not innovate. I have never been a believer that government is the way to produce advances in technology or innovation. It is the market that provides these innovative forces, and competitive tensions are one of the best ways to produce these. But here we have a bill before us that mandates prices and reduces returns, preventing private investment in new networks. We have a great concern about this.

Over time, if this legislation goes this way, what you will see is Australia falling further behind. It may make an initial leap on somebody’s ratings around the world but, if you do not have encouragement and incentive to invest, innovate, create and move forward in the technologies of the future, you will fall behind. And we know today’s world moves so fast—much faster even than when I was growing up or when most members here were growing up. Mandating to 2020 the kind of technology that Australia will have and, importantly, preventing other technologies from emerging, I think is a critical mistake in this legislation. It is something that will take Australia backwards.

Of course the bill will make it harder. When we reach that one sunny day when Paul Keating is reincarnated and wants to privatise assets—not this Labor government, because ‘privatisation is bad’—when privatisation is ‘good’ again, when we get some more free-market Labor Party members, which is a day I look forward to, this bill will make it almost impossible to sell. In the coalition’s amendments the member for Wentworth has come up with the right formula in terms of preventing the government from shooting itself in the foot and making this asset very difficult to sell.

Debate interrupted.