Harry Jenkins (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Wentworth proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The failure of the Government’s National Broadband Network to deliver taxpayers value for money.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

Over the last few days, the Prime Minister has regaled us with lessons in economics. She has talked enthusiastically about the law of supply and demand. She has talked about the virtues of competition and microeconomic reform. This reminds us of the way in which she described her approach to carefully analysing government policy. We all remember when she was pinged for having opposed any increase in the pension. She said: ‘Well, I look at it this way and that way. I hold it up to the light. I take it away from the light. I look at it from every angle.’ That was her defence. So there has been a commitment to a methodical analysis of projects and, apparently, a commitment to competition. Yet when it comes to the biggest infrastructure project in our nation’s history, the National Broadband Network—$50 billion of investment overall—there is no scrutiny, no accountability and no competition.

The hypocrisy of this government is extraordinary. This is the most extravagant and reckless undertaking of the most reckless and extravagant government we have known in our lifetimes. This is a government that came into office and said that there would be no infrastructure project undertaken without a rigorous cost-benefit analysis having been done first. A cost-benefit analysis says: ‘What are we trying to achieve? We assume that in this case it is to ensure that all Australians have access to fast broadband at an affordable price.’ That is fairly straightforward. Having defined the objective, the cost-benefit analysis would then ask and answer the question, ‘What is the most cost-effective way of achieving that objective?’ That is all that it would do. The need to do cost-benefit analyses is the reason that the government set up Infrastructure Australia, whose task it is to do exactly that. But, in the case of the NBN, there has been no investigation by Infrastructure Australia, no cost-benefit analysis and no attempt to seek to answer the question, ‘What is the most cost-effective way of delivering universal and affordable broadband?’

I come to the government’s apparent commitment to competition, private ownership and the power of the market. We have heard a lot over the last few days about the importance of both market forces and the government getting out of the way of private enterprise. We have had a denunciation from the Prime Minister—it must have hurt her to say it—of Soviet style command economics. Yet here, with the NBN, that is precisely what we have. This is going to be a massive, government owned telecommunications monopoly. In an era when for years both sides of politics have said that telecommunications needs more competition, we are going through the extraordinary process of establishing another government owned monopoly. As though we have learnt nothing about economics, instead of ensuring that there is going to be competition with this new government owned telecommunications company in order to keep prices down, the government is legislating and contracting to prevent competition.

The wastefulness of the public expenditure and the absurdity of the government policy on this are well illustrated by the position of the pay-TV cable network—the hybrid fibre coaxial network—which currently delivers Foxtel pay TV and is owned in large measure by Telstra and also by Optus. It passes about 30 per cent of Australian households. It currently delivers broadband and, to some customers, voice services. It is capable of delivering broadband at a speed of 100 megabits per second. It is using the DOCSIS 3.0 protocol in Melbourne and other cities where Optus’s cable is deployed. In other words, it is capable of delivering precisely the high-speed broadband service that the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, tells us will be available through the construction of this fibre-to-the-home NBN. But what are we going to do with the hybrid fibre coaxial network that passes 30 per cent of Australian homes? It is going to be overbuilt by the NBN at a cost of tens of billions of dollars and it will be prevented, by a contract with Telstra and shortly with Optus and by legislation, from competing with the NBN.

The only reason for that prohibition, stated by the NBN, stated by its advisers, Greenhill Caliburn or, indeed, McKinsey, is to protect the economics of the NBN. This is what it has come to after years and decades of microeconomic reform in which both sides of politics have played a constructive role. We take nothing away from the achievements in microeconomic reform of the Hawke and Keating era. We take nothing away from them on that. They made great reforms. But now we have this latest Labor government that, far from promoting competition, is actually seeking to stamp it out. It is not as though it is seeking to protect an existing government monopoly; it is actually spending $50 billion of taxpayers’ money to create one. This is a script, a political nightmare, that the most imaginative scriptwriter could not have conceived a few years ago. It flies in the face of all of the progress towards microeconomic reform in this country and it will inevitably result in higher prices for users of broadband services.

Let’s be quite clear about this. If the government has a massively overcapitalised telecommunications monopoly, the government will be under pressure to generate revenues for it. It does not matter whether that government is a Labor government or a coalition government. The department of finance and Treasury will be screaming at all of the red ink and screaming at all of the lost investment, and they will be looking for additional revenue. That is going to place inexorable pressure on that monopoly to increase its prices. The only thing that could keep that monopoly honest and keep prices low is real competition, and the government is doing everything it can to stamp out any fixed line competition.

In terms of preparedness to allow this massive investment to be scrutinised or accountable to the parliament, let’s look at what the government has done. Let’s look at what the Prime Minister has done. The Prime Minister talks about holding everything up to the light and looking at it this way and looking at it that way. There will be no cost-benefit analysis. There will be no scrutiny or oversight by Infrastructure Australia. We begged and begged and demanded that the business case be published, and finally we got a redacted version of it. A business case of 400 pages was produced, of which 240 pages were kept secret. For a century we have had a Public Works Committee of this parliament which oversees the public works—the infrastructure—investments of the Commonwealth. It has been doing that for a century. Only the other day, as a member of the Public Works Committee, we solemnly considered $50 million of investment in garages and training rooms for the Army and heard Defence officials describe the cost-benefit analysis they had undertaken. But here, where you have $50 billion, the Public Works Committee—if the government has its way; if the Independents in this House let it have its way—we will be precluded from examining that investment. The government has even gone so far as to seek to exempt the NBN from the operation of the freedom of information laws. Never has so much money been spent by a government with so little scrutiny.

The policy it is pursuing is absolutely contrary and flies in the face of all of the economic reforms of the last few decades. We are all committed—every one of us in this House, I believe—to all Australians having access to fast broadband at an affordable price. There is no question that most Australians do have access to fast broadband. There is also no question that many Australians do not, and there are a variety of reasons as to why they do not, which I will not delay the House with today. A responsible government faced with that challenge, that reality, would seek to ensure that those areas that do not have adequate broadband—whether they be in the bush or whether they be in parts of our big cities—are brought up to speed, literally as quickly as possible. There will be a variety of means of doing this. This is not a case of one size fits all. Australians do not care what technology delivers their broadband service. They want to be certain that it works. To paraphrase Deng Xiaoping—and if the foreign minister were here, he could give us the original: ‘It does not matter whether it is copper wire, glass fibre or wireless, as long as it delivers broadband, it works.’ That is the fundamental point the government is missing.

We are seeing right around the world the explosion of wireless broadband. This is a genuine telecommunications revolution. This year, 2011, will be the first year when more wireless enabled devices are sold—I am talking about smart phones, iPhones, iPpads and devices of that kind—than devices that are intended to be connected to the internet through a fixed line, such as desktop and laptop computers. That is an extraordinary watershed. We see Apple, the leading company in this field, generating three times the revenue from its wireless smart phones, tablet type devices, than it does from desktops and PCs. This is not to say that wireless is the complete solution, but, equally, it is naive to imagine that the explosion of wireless services is not going to have an enormous impact on the broadband experience and the broadband future of Australia.

I say to the House—as someone who has been involved in the technology business for many years—that there is nothing more perilous than trying to pick technological winners and putting all your bets on one, and there is nothing more perilous than for governments to do that. The appropriate approach for a government is to identify its policy objective—which is universal, affordable broadband—and then ensure that we have that delivered in the most cost-effective way possible. If that means wireless in many areas and many applications, terrific. If that means upgrading HFC cable, terrific. If that means fibre, that is good too. It does not matter what the channel of communication is; what people want is the outcome.

I conclude with this point: right at the heart of this we see the government referring to what it claims are the productivity benefits from having fibre to the home. The government has not been able to produce—including in responding to written questions—any evidence of productivity benefits from a fibre-to-the-home rollout. There are many benefits from broadband—no question—but there is no evidence that there is a productivity lift in households going from, say, ADSL2+ to 100 megabits per second. Indeed, nobody can identify any applications for residential use that would require such high speeds, other than—as the Prime Minister said recently—500 channels of streaming television. Whether or not her assessment of the technology is right, we have to ask ourselves whether it is an appropriate allocation of scarce resources—$50 billion—to ensure that every household can stream 500 channels of TV simultaneously into their homes. (Time expired)

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

We just heard from the person who was appointed by the Leader of the Opposition ‘to demolish the National Broadband Network’. That is the charter that the member for Wentworth was given by the Leader of the Opposition. He just spoke about how inadequate current services are. There is a direct reason for that, and that is that he was a part of a government that had 20 failed broadband plans in a row. Australia fell behind the rest of the world when it came to broadband. When those opposite left office, where did Australia rank against developed countries for optic fibre penetration? Australia ranked last—dead stone, motherless last. How many Australian cities ranked in the top 100 for broadband speeds? None—not a single one. Where did we rank on broadband speeds? We ranked 50th. As the rest of the world moved past us, the Howard government was frozen in time when it came to dealing with the National Broadband Network and the needs of tomorrow.

We just heard from the shadow minister for communications and broadband—who knows better than he says. He spoke about downloads of television channels. He knows that the National Broadband Network is not about downloads. That is just part of it. It is the uploads that will transform the productive capacity of our economy—in education, in health, in transport. The NBN will deliver competition, lower prices and better services. It will bring a stronger and more productive economy, with 25,000 jobs a year on average. The NBN will generate tens of billions of dollars of activity over the life of the project and will boost national economic output by some 1.4 per cent. It will transform competition in Australia’s telecommunications market. It will drive growth in our regions and overcome the tyranny of distance that exists within Australia, given our vast geography and relatively small population, and also our distance from markets in the world. It will give us major economic advantages.

What we see from those opposite is an extraordinary campaign, and we heard it again today—part of the dishonest campaign when it comes to wireless. The shadow minister knows that the Gillard government will deliver fibre to the home for 93 per cent of Australians and next generation fixed-wireless and satellite services to remaining areas. We are speeding up next generation wireless so that regional Australia gets faster broadband sooner. NBN Co. just last week acquired spectrum in regional and rural Australia to start building the fixed-wireless network.

Experts agree that, while wireless is one part of the picture, it is not a substitute for fibre. If you are going to rely on wireless broadband, you need a fibre network to support it and you need mobile phone towers on every street connected up to each other in a system through the fibre network. That is something that the member for Wentworth might have an interesting time explaining to his electorate when those towers go up on every corner of every street. That is the only way that it would work. That is why the experts all agree with our plan. Google chairman Eric Schmidt said last week:

Australia is leading the world in understanding the importance of fibre.

…            …            …

This is leadership from Australia …

Hugh Bradlow, Telstra’s Chief Technology Officer, said in November:

Could we eight years and not require high-speed networks? The answer is no because of the capacity issue.

It is simple physics: fibre can deliver data at the speed of light directly to people’s homes in ways that wireless simply cannot. Fibre is the future-proof technology. It is as simple as that. And I believe that the member for Wentworth actually does understand that that is the case.

We have again had arguments about value for money and assessments. Once again, Infrastructure Australia has been raised. Infrastructure Australia is the body whose formation was opposed by the coalition and the body which they have continually tried to undermine. NBN will be value for money. You do not have to take it just from the government and from ministers. The McKinsey KPMG implementation study, with 543 pages of comprehensive financial analysis, was released on 6 May. We then had, when we reconvened after the government’s re-election in August, the call for the corporate plan to be released: ‘Give us the corporate plan. Show us what’s in it, and then we can make an assessment.’ We released the corporate plan on 20 December and it found that NBN will be an income-generating asset. As with all sound investments, taxpayers will get their investment back in full with interest—a rate of return of 7.04 per cent against an average 10-year bond rate of just 5.39 per cent.

The Greenhill Caliburn review found that the corporate plan is reasonable, commercial and contained ‘the level of detail and analytical framework that would be expected from a large listed public entity evaluating an investment opportunity of scale’. Alan Kohler, Editor in Chief for Business Spectator, had this to say:

Not only will the NBN not be a white elephant, it will almost certainly prove to be a great investment. In fact, without wishing to get carried away … it could represent, on its own, a huge national savings plan. When it’s finished the asset will be worth several times the government’s investment of $27.5 billion.

Google vice-president, Mr Vint Cerf, one of the ‘fathers of the internet’, said:

I continue to feel a great deal of envy because in the US our broadband infrastructure is nothing like what Australia has planned. … I consider this to be a stunning investment in infrastructure that in my view will have very long-term benefit.

The fact is that under the NBN plan, Australian taxpayers will own a world-class telecommunications asset. The industry understands, just like the Gillard government does, that the NBN will deliver real competition, lower prices and better broadband services for all Australians, especially in our regions.

When I have attended international conferences as the infrastructure and transport minister, our plan is highly regarded throughout the western world. Our competitors have taken note that after the sleepy era of those opposite—stuck in the past, 20 failed plans, nothing moving forward—this government is making Australia competitive once again. Those opposite continue to run interference and run opposition like they do for every single policy initiative of the government.

From time to time, oppositions will oppose government initiatives, but this opposition is so frustrated and angry at the loss last August—and we saw the festering anger today—so angry with the Australian people—

Honourable Members:

Honourable members interjecting—

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

And there we have it again. They are so angry with the outcome of the election that they have decided to oppose everything. They are totally divided, as we have seen on full public display this week.

The member for Wentworth went out there and made statements last night on Lateline that a decent Leader of the Opposition should have made when he slapped down the comments of the shadow parliamentary secretary assisting the Leader of the Opposition. When he did that, he did that out of desperation. Have you noticed how many questions the member for Wentworth has had about the National Broadband Network or anything else? Indeed, they sling him the Thursday MPI debate out of desperation so that he can make a single contribution to this House. Everything that they do is not determined by the Australian national interest; it is determined by their own internal political machinations. That is what we have seen this week with the Leader of the Opposition, who is opposed by the member for Wentworth, the mover of this MPI, and opposed by his own shadow Treasurer. The Deputy Leader of the Opposition has been busy backgrounding newspapers about shadow cabinet discussions. The shadow finance minister wants the job of the shadow Treasurer who wants the job of the Leader of the Opposition who wants a job of the government.

The frustration is there. The young guns at the back there who yell so loudly, and come up to you in the corridors—you can understand the frustration. You can understand the frustration with people like the member for Mackellar and the member for Menzies occupying the front bench, because the Leader of the Opposition says that any day now the government might fall over.

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

Mr Fletcher interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The honourable member for Bradfield will remain silent!

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

That is an excuse to keep the shell there. That is his excuse, so those opposite feel that frustration. The only problem is that the Leader of the Opposition has his character flaw: the same people whose minds he wants to change so that they can help him form government are the people he is too busy abusing and denigrating day after day after day. And it is not just here in Canberra. They actually get on planes and fly up to electorates in order to abuse the Independent members of this parliament whom they want. They want them to change their mind and swap over and make Tony Abbott Prime Minister.

This is the year in which Tony Abbott enjoys his period as Leader of the Opposition. The only question is: will he make it to the winter recess? That is the question. I am very confident that he will not make it to December, to Christmas. One of his frontbenchers thinks parliament is sitting on Christmas Eve this year, you will recall—the member for Mackellar. She will be here in parliament but the Leader of the Opposition will not be.

The coalition has a dreadful record when it comes to delivering on national broadband. What you have from this government is vision when it comes to delivering on the National Broadband Network, like we have vision when it comes to delivering infrastructure across the board. This is a government that has doubled the federal roads budget. We have announced 87 of 120 major projects underway or complete, many of them running ahead of schedule. There is the Northern Expressway and Port Wakefield Road upgrade in South Australia, the Mandurah Entrance Road in West Australia—open two months early, in October 2010—the Kempsey Bypass which is on track to be delivered one year early. Those opposite did nothing about it. We provided the funds for it. We are busy building the longest bridge ever built in the history of New South Wales as part of that Kempsey Bypass.

We have delivered an investment in rail by more than tenfold. In our first term we have rebuilt more than one-third of the interstate rail network.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Mr Buchholz interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for Wright ought not to interject from outside his seat.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

As part of our stimulus plan, we have fixed 600 black spots projects and we have completed all 300 projects at high-risk level crossings from our investment into boom gates. We have shown that we can deliver on budget and on time, and the National Broadband Network, the most important infrastructure project, will future proof our economy. They know it; they just did not have the courage or the vision to do anything about it over the 12 long years of office and now they simply want to wreck and oppose rather than build what the nation needs. (Time expired)

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

I certainly welcome the opportunity to speak on this very important issue. It is all about the efficient and effective allocation of resources. I think that all in this House see the need for improvement in broadband services but the issue is: how do you deliver it? Do you deliver it in a way that is efficient and effective and provides a return on investment for taxpayers’ funds, or do you deliver it in a way which is more about PR stunts and photo opportunities and an endless waste of taxpayers’ money without scrutiny and without reference to economic outcomes?

That is the path that this government is taking us down. If we go back to December 2007, Senator Conroy gave a commitment on spending to ABC’s Lateline program, when he said:

We are committed to spending no more than $4.7 billion.

That was Labor’s commitment on the day we announced the broadband network, and we have never changed it. $4.7 billion was their commitment back in December 2007 and in just two years the price of Labor’s network did not go up 100 per cent, it did not go up 200 per cent—it has gone up 1,000 per per cent. He has broken his promise to the Australian people not to spend more than $4.7 billion. He has broken that tenfold, and he says, ‘Trust me, it will all work out.’ How do we justify that expenditure?

When he had to get on the plane with the former Prime Minister and they were in a bit of jam because they could not find a commercial tenderer, an operator who could make it viable at $4.7 billion, he had to come up with something. They needed to have a major announcement. So they said, ‘Let’s come up with something that is truly spectacular, something that will capture people’s imagination—not something that is financially viable and not something that is actually going to deliver a return on investment,’ and they came up with an announcement that was going to cloak the fact that they could not get a commercial operator to pay $4.7 billion. In the true spirit of Labor, in the true spirit of the nanny state, they blow 10 times that figure in taxpayers’ money purely to provide political cover for their first failed proposal.

It seems incredible that when you look around at what markets are doing, you see a decline in the use of fixed lines. Senator Conroy has for months—in fact for over a year now—been quoting the benefits of South Korea and saying how good the South Korean system is, that it is something we should aspire to. When the Economist Intelligence Unit puts out a report and unfavourably compares Australia’s proposed national broadband network with what is happening in South Korea, he says that that is comparing apples with oranges. So he seeks to compare us with South Korea when it assists his case, and as soon as the very clear differences between the two systems are noted then he seeks to distance himself from that.

It is interesting to note also that in South Korea the use of wireless is outdoing the use of fixed line by two to one. So rather than looking at the overseas experience and gaining from that, looking out in the market and seeing what the trends are, he decides to dictate a solution that involves digging up 10.9 million backyards and providing fibre to the premises, whether that is economically justified or not. It is all about pursuing a political outcome.

How do you achieve that? You do not achieve that through thorough analysis. You do not achieve that through finding the most efficient way to deliver the service. You achieve that through protecting the project from scrutiny. You achieve that by denying the Productivity Commission the opportunity to investigate the matter. You achieve it by denying the Joint Public Works Committee the opportunity to investigate the matter. You do it by denying the opportunity for documents to be sourced under freedom of information. You would expect that they would welcome scrutiny of a project that was allegedly a world leader and was allegedly going to take this country into the 22nd century. You would expect that they would throw open the door, because this project should stand on its own two feet. But instead, they fear scrutiny.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

What have they got to hide?

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

Very good, member for Riverina—what do they had to hide? They fear scrutiny, and they fear the fact that the writing is on the wall.

Young consumers today do not want to be plugged into the wall. Young consumers want the flexibility that wireless offers. That is shown in markets around the world, where we see declines in fixed line telephony and declines in the plug-in mentality in favour of getting the internet where you are and when you are. There is the use of mobile devices. We see a massive shift. Any corporate director of operations would be looking at the markets carefully. He would be examining the trend. He would be trying to anticipate what consumers want. But here we have a government that says: ‘I know what’s good for you. I know what the future holds here. We’re going to cause you all to have to plug into the wall.’ Of course there is a use for fibre. It is a very effective medium, but it is just one of a suite of technologies that can deliver the appropriate outcomes for the Australian people.

There is no need to dig up every single backyard in Australia to deliver high-speed broadband. There is no need to spend $50 billion. Rather we should be focusing on fixing up broadband black spots, particularly in regional and rural areas. We should be focusing on the ways in which we can address the shortcomings of the current system. Why is it logical to provide a 100-megabit service throughout Sydney, Melbourne and Brisbane to those properties that are already passed by the HFC network, which can deliver 100 megabits a second through DOCSIS 3 already? Why is it a good use of taxpayers’ money to just ignore that existing technology? Why is it a good government policy to legislate to prevent competition from that alternative medium that could probably provide broadband at a far cheaper cost and could be achieved without having to dig up every backyard in Sydney, Melbourne and Brisbane? It is absolutely outrageous, yet this government continues, protected by that veil of secrecy that is the only thing between them and total embarrassment—that veil of secrecy that is protecting this project from the scrutiny that this project rightly deserves. It is protecting this government.

We have seen in New South Wales a government in place for 16 years, and they ran on a formula of spin. You see the New South Wales people’s reaction. In the long term they are seeing through the spin. Unfortunately, this government is using the same hymn book. They are adopting exactly the same strategies, and they will fall foul of the Australian people because this project does not stack up. This project is buttressed by anticompetitive measures. We have a Competition and Consumer Act 2010 that sees the need for competition as a major way of driving down costs to provide efficient outcomes to consumers. But when we have this project—the largest infrastructure project in Australia—what do they do? They legislate against competition. They legislate against a driver of cheaper prices and better outcomes for consumers. They legislate to buttress their own political position, which is tenuous indeed. It is $50 billion—the largest infrastructure project in the country—and they need to protect it. They cannot champion its virtues; they have to hide it from scrutiny.

We have seen endless promises from this government broken. We have seen endless cases of waste and mismanagement, and this is going to be the greatest case of all. We are going to see not just a few stray billion dollars wasted; we are going to see $50 billion wasted and a huge capital loss that will have to be borne by the taxpayer. We are going to see countless opportunities squandered for alternative infrastructure projects because money is being poured down Senator Conroy’s budgetary black hole. We see in Tasmania that they have had to force people to opt out. With all of the promotion and all of the fanfare over the National Broadband Network, subscriptions were so low they had to encourage people by forcing them into the project. What sort of vendor has to force people to buy their project? The minister responsible is the man who put the con into Conroy. This project is falling apart around him like a leper on a trampoline. It is an absolute disgrace that they are wasting $50 billion of taxpayers’ money. Anybody who believes they are going to achieve an IRR of seven per cent is living in a fool’s paradise. The government knows it. They have to protect the project from scrutiny because they know that when the facts are on the table this project just does not stack up.

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

I would like to thank the member for Wentworth because, just as the member for Casey, the former shadow minister for broadband, communications and the digital economy, gave me the most hilarious laughs during the federal election campaign with this policy—which remains, may I say, coalition policy today—the member for Wentworth has followed it up with an article in today’s Sydney Morning Herald where he quotes Deng Xiaoping, no less: ‘Let a hundred flowers bloom in broadband field’. He has taken inspiration from Deng Xiaoping. I do believe he is leading a Maoist insurgency against the Leader of the Opposition. We welcome that on this side. The other thing I would say, while we are quoting Deng Xiaoping, is that another one of his best quotes is ‘To get rich is glorious.’ He is hardly the man who is going to deliver accessible and affordable broadband for all when he takes inspiration from Deng Xiaoping.

One of the other things that is so hilarious about the article in the Sydney Morning Herald this morning is the member for Wentworth’s assertion that Japan and Korea have shown no significant productivity benefits from having a fibre-to-the-home, high-speed broadband network. I think we should help him pack his Louis Vuitton case, put him on his Learjet and send him to Tokyo and Seoul to see exactly what productivity gains are being made there. And do not take it from me. Let us have a look at the International Telecommunication Union and their case study of Korea. They say, ‘Well, isn’t it amazing that Korea has managed to do so well’. In fact, they call Korea an economic miracle in growth thanks to ICT. This is despite the fact that Korea is not demographically suited to having the highest internet penetration in Asia. It is not demographically suited to have the best communications with other countries, because they have their own language. Yet they have such a high rate of productivity growth, and why is that? That is because of their investments over many decades in high-speed fibre broadband networks.

I continue to be amazed by those opposite who wade into this debate and think that it is a question of wireless versus fibre, that somehow fibre is not going to be able to deliver all the solutions that we need. As a short lesson, whilst a variety of technologies—as I have said in this place—will be employed in order to deliver high-speed broadband, they all require one thing. They require a backbone that will be sufficient to carry all the communications on it. I quote from the Broadband Commission who presented their case to the UN:

A high-capacity fibre optic packet transport backbone is the fundamental backbone infrastructure that countries need to deploy to support the growth in broadband services.

For those who are opposed to the NBN, who continually come in here and say that the government has picked one technology over another, this assertion is an absolute nonsense. As anyone will tell you—and this is known by those who go onto many of the blogs and technology websites where intelligent people have been contributing to this debate—the fibre based NBN backbone augments all other technologies because it is a technology neutral backbone. Nothing is faster than the speed of light. It alone has the capacity to achieve what is absolutely needed to deliver ubiquitous high-speed broadband all around the world.

You do not need to take this from me. Even at the Comms Alliance conference yesterday and on Tuesday, NBN Co., Telstra and Optus made the point that wireless broadband and fixed broadband are complements to rather than substitutes for each other. Optus went on to say that you might group HSDPA with ADSL and LTE with HFC as potential substitutes on a service-by-service basis, but there is no wireless technology that could be grouped with GPON which is the basis of the National Broadband Network. We have endorsement for what we are doing in this country from people like Eric Schmidt, the former CEO and now Executive Chairman of Google. What he has to say is truly instructive:

Let me start by saying Australia is leading the world in understanding the importance of fibre. Your new Prime Minister … has announced that … 93 per cent of Australians … will have gigabit or equivalent service using fibre. And the other 7 per cent will be handled through wireless services of a nature of LTE.

This is important. He goes on to say:

This is leadership. And again, from Australia, which I think is wonderful.

Eric Schmidt is one of the leading telco and communications experts in the world. It also amazes me that the Leader of the Opposition, both in here and publicly, seems to always have an opinion on a topic that he obviously knows nothing about. His latest effort over the break when he was talking about the NBN is a special:

It’s pretty obvious that the main usage for the NBN is going to be internet-based television, video entertainment and gaming.

For the Leader of the Opposition to claim that the NBN will be used only to watch TV and play games shows just how little he knows about the issue. A lot of people made comments on what he had to say and I could not have expressed it better than this person in a letter to the Sydney Morning Herald who captured it perfectly:

The complete failure of the Leader of the Opposition to grasp the potential of next-generation communications networks is appalling—and unbelievably embarrassing for Australia were he ever to become prime minister.

I could not have said it better myself. While we are on the issue of people who have a very limited understanding of technology, the member for Wentworth, during the break, was talking about his iPad in the Sydney Morning Herald and how good it was. He said he did not need a fixed line because he had wifi. Telco 101 will tell you that wifi is actually processed through a wireless router which is in turn connected to a fixed-line connection. For these people who obviously have no idea how the technology works to come in here and start lecturing us about how wireless should be the solution beggars belief.

I am glad that the member for Ryan is in the chamber, because I think listening to people is important and you often learn things from people in this place. I have been very interested over the last couple of months to hear the member for Ryan talk about a broadband delivery system happening in Brisbane thanks to Brisbane City Council. She said, ‘Why do we need the NBN when we have this fantastic partnership in Brisbane which is going through the sewers and delivering broadband far better than the NBN ever could?’ She brought it up again on Monday when she spoke in the debate on my private member’s motion. She said:

… the City of Brisbane is delivering this—

this being high-speed broadband—

to every household and every ratepayer in the city at no cost to the ratepayer and at no cost to the city.

I thought that was too good to be true—and guess what? It is. Yesterday you had only to look at the CommsDay headline ‘Brisbane flushes sewer broadband plans’:

Brisbane City Council has reportedly washed its hands of plans to install a broadband network through its sewer system ahead of the NBN rollout, abandoning its relationship with i3 Asia Pacific, the firm that was aiming to splash out $600 million on the scheme. According to the Brisbane Times, Lord Mayor Campbell Newman dumped the project.

For those opposite who have been holding up for so many months that this is a fantastic alternative broadband plan, I will let that speak for itself. Yet again we have had those opposite stand up and say, ‘No, we need to let the market in; the market needs to be able to deliver.’ The member for Wentworth talked about how 30 per cent of Australia enjoys access to a cable network. That is right: it is a coaxial cable that goes down the eastern seaboard. Do not worry about anyone else who cannot connect to it. By the way, as much as he would like to say that this is a substitute for fibre, I have another little technology lesson. Cable is the same as spectrum in terms of it being a shared resource. You will never get the capacity and speeds that you need for the uploads we need in the 21st century purely on cable.

Yet again, those opposite have come in here purely attached to their policy that is over six months old. They have not replaced it yet. Regardless of anything else that happens, their policy is to cancel the NBN. Again today we see another appalling attempt to deny young people, to deny regional Australia and to deny the future of young Australians. (Time expired)

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

The question before the House in this matter of public importance debate this afternoon is a very simple one: are we getting value for money from the National Broadband Network or is it a very large expenditure which cannot be justified? To put the question another way: is Labor’s plan to spend $50 billion a sensible way to achieve the objectives which are uncontentious between the two sides of this House? It is uncontentious that we need to update and improve our broadband infrastructure. It is uncontentious that Telstra should be structurally separated to address the vertical integration problem. These issues are uncontentious. The issue of contention is whether the plan that Labor is pursuing is a sensible one to achieve policy objectives. And you would not have got a persuasive answer to that question from what we have heard this afternoon.

The Minister for Infrastructure and Transport told us in wafty general terms that it would transform productivity, but he could not answer the precise question: what can be done for 100 megabits per second that cannot be done for 12 megabits per second or for slower speeds so as to justify the massive increase in expenditure that is required? He gave us wafty generalisations that fibre was a future-proof technology. Then we heard from the member for Greenway that apparently Google says that the National Broadband Network is a very good thing.

I have no doubt that, if you are in the business of delivering internet content and somebody proposes at their expense to build a brand-new network which you can use to deliver your content, that is an attractive proposition, but for those of us who are being asked to foot the bill—and that is every one of us, every Australian taxpayer—we probably want to give this proposition rather more scrutiny. What I want to put to you is that in fact this is not good value for money for three fundamental reasons: there is a very large amount of money here at risk for essentially political reasons without the business case having been made out, it is very unclear what public policy problem it is designed to solve and it is very, very wasteful.

My first proposition is that this is about politics. The reason there is $50 billion proposed to be spent is that Labor got itself into a hole when the policy it took to the 2007 election, which was to spend $4.7 billion on a fibre-to-the-node network, could not be delivered. The solution was political shock and awe—pull a big number out of the air, $43 billion, be visionary and say that we are now going to deliver fibre-to-the-home. The reason for this was not based upon any analysis of what could incrementally be delivered by fibre-to-the-home over other technologies, it was not based on any analysis of productivity benefits or other specific benefits; it was based upon a political need. If you look for evidence for that proposition, look at the business case—$41 billion put at risk, and what do we get for it? A return of seven per cent.

Interestingly, the corporate plan of NBN tells us that the company’s weighted average cost of capital will be 10 per cent. Let me make a basic proposition of corporate finance. You determine the value of the project by comparing the return to the cost of capital. Your desire is to have your return exceed your cost of capital. If your return is less than your cost of capital, you are destroying value—you have a project with a negative net present value. That is one of the most fundamental propositions of corporate finance. This project, on the admitted documentation of the National Broadband Network Co., is destroying taxpayers’ money. It is claimed to be justified on commercial grounds but, as the corporate plan itself says, no private sector investor would be attracted to this proposition. It is based upon unrealistic assumptions about take-up and it is driven fundamentally by political motives. It is perhaps not surprising that a Prime Minister who stood in front of the Australian people in April 2009 and recommended that this would be a first-class investment opportunity for mums and dads is no longer with us because what an unconscionably misleading thing that was to say.

The second problem which demonstrates why this National Broadband Network of Labor’s is not good value for money for the Australian people is that there is a real lack of clarity about what public policy problem it is designed to solve. If the problem is that we want to increase broadband penetration—the press release the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, put out just before Christmas said that, because the OECD statistics show that that we are 19th in the world for broadband penetration, that added to the case for building the National Broadband Network—and if you believe that Minister Conroy is putting to us that the objective of the National Broadband Network is to drive up broadband penetration, this raises the very obvious question: how is it that building a new network is going to drive up broadband penetration when, by necessity, you are then constrained in your capacity to offer lower prices?

As Prime Minister Gillard correctly told the House last year, Australia has the fifth highest broadband prices in the world. What is the most powerful driver to increase broadband penetration? It is reducing broadband prices. When you go back and look at the data, as I have done very carefully, between 2000 and 2005 you saw a very clear relationship when Telstra, then the dominant provider of DSL, dropped its prices and penetration rose. But we now have a policy under which Labor is spending $41 billion, plus additional money. It is said there will be a commercial return on this and to achieve this return prices will have to stay high. In fact, the entry-level wholesale price that the NBN will be offering is $24. How does this compare to the band 2 unconditioned local loop service price, which is presently the basis on which competitive DSL prices are offered to the majority of Australian households? That price is $16. In other words, we are going to see a 50 per cent increase in the basic price, the wholesale price, which is the foundation on which retail prices are built. So Labor’s policy does not address the fundamental objective, which it says is inherent in the policy of increasing penetration because you are increasing prices.

The third reason which demonstrates beyond doubt that this is not good value for money is that this plan will see useful telecommunications infrastructure trashed. The copper network owned by Telstra will be trashed. NBN Co.’s own corporate plan says that more than one-third of customers served by the copper network today can receive 16 megabits per second or more, yet that infrastructure is simply to be trashed. The hybrid fibre co-ax network can today deliver 100 megabits per second in Melbourne and, with simple upgrades, can deliver the same speed in the other four capital cities where the Telstra HFC network operates. The Optus HFC network operates on the same technology. These networks can, either today or very readily, deliver 100 megabits per second. They too are to be trashed. They are to be thrown away, they are to be squandered and they are to be shut down, and we are to be left with a National Broadband Network which will be a monopoly.

Indeed, to support the monopoly status of the NBN, which Stephen Conroy, the Minister for Broadband, Communications and the Digital Economy, gleefully goes around reminding us all of, there will be legislation passed which specifically places impediments in the way of persons proposing to enter the market in competition with the National Broadband Network. This is a profound reversal of 20 years of bipartisan telecommunications policy, which has always been underpinned by a commitment to increasing competition in the private sector market so as to stimulate lower prices. We have seen a profound reversal of that policy, and we have a policy which is designed for political reasons, with an unconscionably large amount of taxpayers’ money at risk with no realistic prospect of a return, with a lack of clarity as to what policy problem is being solved and with scandalous waste in the destruction of the existing infrastructure. (Time expired)

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the matter of public importance put forward that we, the Gillard Labor government, have not delivered value for money in broadband. The MPI from Malcolm Turnbull, the member for Wentworth, today demonstrates the Liberals’ lack of understanding when it comes to broadband—and he was not even here to hear his own supporters. Is he out with Joe, sorting who will be the leader by Easter? Malcolm said last year—

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

The member for Bass ought to know that he ought to refer to colleagues by their titles or their electorate.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

Thank you very much, Mr Deputy Speaker. Last year the member for Wentworth said that 12 megabytes should be enough for anybody. We, the Gillard government, feel that Australians deserve better. Today I want to put on record my absolute support for the National Broadband Network. Let me tell you why.

Tasmanians have been putting up with some of the slowest, most expensive broadband in Australia, and the Labor government’s National Broadband Network is going to put an end to that. I am proud to be part of a government that is putting infrastructure on the agenda. After years and years of neglect from the high taxers, the party of ‘no’, we are getting on with the job of running the country and preparing for the future. Historically, Tasmania has the lowest proportion of households of any state or territory with broadband, at 49 per cent, compared with the Australian average of 62 per cent. But the federal Liberals have no plan to bring Tasmania up to speed with the mainland, let alone to give it world-class broadband. Even the state Liberals in Tasmania know that the NBN is crucial, and I think it is high time that the high taxers, the party of ‘no’, came on board. The NBN is going to transform Tasmania’s economy, along with the rest of our nation. I cannot overestimate the difference it is going to make to people in my home state.

I am lucky that the first NBN services were officially launched, in August last year, in my electorate, in the area of Scottsdale. Stage 2 includes other areas in my electorate, such as George Town. Under our National Broadband Network, the economy will be strengthened. It is the single largest infrastructure investment this nation has ever seen. It will modernise Australia and connect big cities and regional centres. The people in my electorate of Bass are very excited about the NBN. They are excited about the NBN because it will improve business productivity and allow businesses to be competitive on a national and international scale. The only concerns that my office has had about broadband is that of constituents wanting to be connected sooner. I have not had complaints that this is a waste of money, a waste of taxpayer’s dollars—not at all. My constituents know value for money.

If those opposite were keen on accountability and value for money, they would have done a cost-benefit analysis of the Adelaide-Darwin railway or the privatisation of Telstra. Where was the Productivity Commission when the cost-benefit studies were to be done on that? Where was the cost-benefit study on the $10 billion water plan? Did you do a cost-benefit analysis on the OPEL regional broadband plan? And what about the $11 billion black hole? The highest-taxing party this nation has ever seen, the party of ‘no’, could not add up. The NBN will directly support 25,000 jobs. I ask those opposite to tell me of their plans to create 25,000 jobs. I doubt they can. The alternative of the party of ‘no’ is to have towers and copper, which members of the opposition have consistently complained about. They are the NIMBYs: not in my back yard. Our plan gives better speed, and the amenity of Australia will be enhanced by the broadband fibre compared with towers and copper, which is the opposition’s plan.

The Liberal Party’s attitude to broadband reminds me of the time when the Americans were first embracing the Edison telephone system. Sir William Preece, Engineer-in-Chief of the British Post Office, decided that the UK would not need a telephone system, as they had a superabundance of messengers and errand boys to run telegrams. Tony Abbott and his colleagues want to send our country backwards by pulling the plug on the NBN. We heard during the election campaign that the NBN would be the first thing to go if they were elected. Australia is thankful they were not. Australians cannot trust the Liberal Party on broadband. I need a spare set of hands to count how many failed policies they have on broadband. Was it 19 or 20 failed plans? And they still have no decent policy.

Consideration interrupted.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I remind the honourable member for Bass of the provisions of standing order 64. He should refer to the Leader of the Opposition by his title.