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

I rise to speak on the inquiry into the role and potential of the National Broadband Network conducted by the House of Representatives Standing Committee on Infrastructure and Communications. In doing so, I speak in support of the dissenting report. As the coalition members of the committee stated:

To be meaningful, this inquiry should have been conducted before the decision to spend $43 billion on the NBN, and it should have been structured as a cost-benefit analysis, rather than a shopping list of benefits without any consideration of cost.

There can be no denying that the terms of reference for the inquiry were designed to provide a feelgood, supportive report for the already-in-progress rollout of a national broadband network. Indeed, to criticise the NBN is akin to criticising the construction of a new road: even if you are not going to use it yourself, you are prepared to support it as you aware that, in the long term, it will be of benefit to the wider community.

The coalition support a national broadband network. However, we have major concerns about how NBN Co. is delivering the project. Needless to say, that was not one of the criteria we were asked to consider. While all presenters supported the NBN rollout, several were unable to provide evidence as to what applications would require fibre to the home, FTTH, as opposed to fibre to the node, FTTN. It is worth noting that many applications are already being delivered by existing service providers. Indeed, one submitter proposed that all he really wanted was a telephone line that did not drop out, so perhaps a 100 megabits per second national broadband network in this case is a little bit of overkill.

There has never been any dispute that the rollout of the NBN will deliver benefits in many sectors, particularly health and education. Indeed, the committee was presented with many outstanding examples of future opportunities, although the thought of having your bank manager meeting with you in your living room as an avatar may not be embraced by everyone.

What stood out was the lack of preparation and planning, due largely to the short notice provided by NBN Co., resulting in embarrassingly low take-up rates. Many submitters were critical of the way NBN Co. had selected the trial sites and had failed to give adequate advance notification of the selection of sites to ensure optimal opportunities. They were also critical that NBN Co. had failed to arrange for the provision of education on and promotion of the benefits of a national broadband network.

No-one disputes the fact that Australia will benefit from the provision of high-speed broadband across the nation. However, the coalition does not support the outdated, last-century monopoly telco model being delivered at an exorbitant cost by NBN Co. To genuinely foster innovation we need a competitive, open-access model going forward. This inquiry has highlighted that going forward, even with the NBN Co. model, there must be better advance promotion and engagement with the community. It is not good enough that NBN Co. absolve themselves of all responsibility with the glib line that their role is just to build it. For $43 billion plus, they must also be responsible for take-up by the communities. 'Build it and they will come' is not an acceptable approach.

I record my appreciation to all those organisations and individuals who went to the effort of making a submission to the inquiry, particularly those who welcomed us on our many site inspections. I also place on record my appreciation to the dedicated and hardworking members of the secretariat—in particular, Julia Morris, Andrew McGowan and James Nelson—and, finally, to my parliamentary colleagues, whose company I enjoyed on our interstate fact-finding missions. While we are in furious agreement as to the potential benefits of the NBN, we will stay divided on how it should be delivered.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I start where the previous speaker finished and thank the secretariat and fellow members of this committee for their work. I was probably the recalcitrant member of this committee. But I thought it was important to be a link to the NBN committee, the joint committee I chair, and make sure that there was as seamless a transition from this report—a very good report entitled Broadening the debateto the ongoing work that will take place through the Joint Committee on the National Broadband Network.

The work done in this report—both the main substance of the report and the dissenting report—is important and deserves to be read by as many people as possible. There are some really good considerations for the parliament in dealing with the need for speed in improved information communication technology in Australia today.

There is a broad consensus in this parliament and the community on the importance of better ICT. A recent report by Deloitte-Access Economics titled The connected continent—how the internet is transforming the Australian economy found:

The direct contribution of the internet to the Australian economy is set to increase by $20 billion over the next five years, from $50 billion to roughly $70 billion.

The report estimates that approximately 80,000 more Australian jobs will be available in areas directly related to the internet as a result. It is a sector developing on its own, not just a tool for other sectors to use.

The three basic documents concerning the performance of the NBN are, in my view, the government commissioned NBN implementation study dated 6 May, the NBN Co. corporate plan for 2010 to 2013 and the government's statement of expectations for NBN Co. from 17 December 2010 issued by the two stakeholder ministers. All of those are publicly available. This report, alongside the first report of the Joint Committee on the National Broadband Network, released this week, are, I think, the foundation documents. They are all public for anyone who is interested to get a greater understanding of what exactly the government is trying to achieve.

In my view, many Australians are under the misconception that NBN Co. is building a government owned monopoly. I just heard it again from a previous speaker—'to own and run the wholesale platform at taxpayers' expense indefinitely, with no return to the government on its very large initial capital expenditure'. In my view, this is an incorrect assessment of what the final product will look like and what the true return to the taxpayer really is. The end product will, more than likely, be a privately owned and operated wholesale platform with a return on revenue through engagement with retail providers as the platform is built, with the opportunity for a significant return once the NBN is complete.

As a consequence, in my view, a really important question to be pursued by the parliament is when and how private equity and finance will be engaged in the wholesale platform and at what financial return to government and, ultimately, the taxpayer. The political debate of the moment is obscuring the fact that what is being built will be an asset on the financial books of the taxpayer. As with all assets, everything from a house to business investment, if it is built efficiently and effectively and if private equity is engaged in the right way at the right time, an initial spend can lead to a much larger return in the future. With that in mind, I flag to many of my colleagues and to the parliament that I will be exploring further the parliament's view of where the points of entry are for private investment alongside this initial public investment, to make sure maximum return on the parliament's investment is secured on behalf of Australian taxpayers.

This Broadening the debate report importantly, in my view, raises a question that was also brought up in much evidence received by the National Broadband Network committee. That is the question of just how NBN-ready government itself is. I think there is some very good education and promotion work being done by government to try to get community and business as NBN-ready as possible. Many, however, in the evidence gathered for the two reports, wanted to turn that question in on itself and ask government itself just how NBN-ready it is. I think it is a fair question and an important one for the government to reflect upon. Tax collection is just one example. In South Korea, for instance, where there is already 100 megabits per second to the home, 80 per cent of tax collection is now done online. Hallelujah! Compare that to our complex tax system in Australia. The internet is a faster and more reliable tool for communication with the tax office. At the moment, about 20 per cent of tax lodgements are done online in Australia. There is a huge opportunity for some simple but important administrative work on behalf of the community and businesses that government could lead on via the tax office to improve community life and business life in Australia.

There are issues around content and copyright. There are discussions going on with attorneys-general and many other players, but it has not been nailed yet. There is some urgency in that work. We are moving to a much more online environment. People can easily have products stolen online or be abused online, and if copyright laws are breached or are unclear we have a real problem with the nature of business in Australia as we transition to greater use of the internet in a whole range of applications.

Evidence was gathered of a third example. It is really practical and fulfils the nature of future use of the internet in order to value-add on services of the past. This evidence was from the Post Office Agents Association. They want to engage with the technology and applications available. They made the point that there are over 400 post offices and, yes, they are franchises of a government business enterprise, but they still do not have really good access to online services connected to their post offices. If we are fair dinkum about the post office being a community hub, particularly for many rural and remote communities, for not a lot of money in government terms—it is around $7 million to $9 million—we could deliver much improved communications opportunities to over 400 communities through their post offices. It would make the post offices of the past the community hubs of the future. That evidence is a practical example and I hope the government reflects on that in its desire to be NBN-ready as much as the broader community wants to be NBN-ready.

The only other point I would like to make that is loud and clear concerns the issue of education. Partly because of the nature of the adversarial political debate and partly because we are venturing into new areas of thinking and technology, a large number of people in the Australian community and in the business community are in need of greater understanding of the product that is being built. Much more work needs to be done by government to educate communities in applications that are possible via the internet. I would hope an organised education campaign that sits alongside the nine- to 10-year rollout is very much part of the government's agenda.

I will finish with a story. A few of us made a trip to Broken Hill on a related committee. The shadow minister was part of that trip to Broken Hill. There was a lovely story about a small town called Packsaddle. That very small remote community has, via the use of old car antennas and a bit of duct tape, essentially managed to build their own communications system so that they can communicate with the Royal Flying Doctor Service that operates out of Broken Hill. It would be wrong to assume too much about communications in Australia today when you hear that communities such as Packsaddle have to build their own communications system via car antennas and some duct tape. I would hope that everything we do runs past the Packsaddle test. We want to engage every member of the Australian community in this bill and it has to be applicable to all communities, including those such as Packsaddle. There are many others like it that are working off a low base when it comes to communications technology. The role of this parliament at the moment should be to engage the many communities such as Packsaddle much better than has been done in the past.

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

I want to commence by congratulating the committee on its work in producing this report and in particular the coalition members, whose dissenting report, written by the members for Hinkler, Ryan and Bradfield, is an outstanding analysis pointing to the defects in the arguments given in favour of the NBN. It goes to the very heart of the problem here—that we have a gigantic infrastructure project being undertaken by the federal government with inadequate planning, inadequate preparation and, above all, no cost-benefit analysis. At no point did the federal government, the Gillard government or the predecessor Rudd government, address this question, which is surely the core question: what is the fastest and most cost-effective way to ensure that all Australians can have access to very fast broadband? How do we do that in a way that ensures it is affordable, recognising that the biggest barrier to internet access is not technology, nor indeed is it geography, but lack of household income? Households with incomes of $40,000 a year or less are eight times more likely not to have access to broadband, to the internet indeed, than higher income households.

Yet with the way the NBN is being undertaken we see a heavily capitalised, overcapitalised government monopoly which by reason of it being a monopoly will have both the incentive and the means to charge higher prices. We know from the OECD that over the last five years or so broadband prices in Australia have declined by 69 per cent. Why was that? It was because of competition. There is no other reason. Businesses do not reduce their prices out of a caring generosity towards their customers; they reduce their prices to respond to competition, because somebody else is trying to get their business by offering a better deal. So they cut their prices in response. That is what has driven lower prices. And yet we see with the NBN an end to competition because the NBN will be, as conceived by this government, the only fixed-line connection for voice and broadband to households. So the HFC cable which currently passes 30 per cent of households will not be able to be used by Optus or Telstra, the owners of the two HFC networks, to offer broadband, let alone voice services, in competition with the NBN. There is no reason to do that other than to protect the already dodgy economics of the NBN.

In every other country in the world, governments, wherever they can, promote facilities based competition, and around the world the industry and governments and regulators alike are absolutely aghast that Australia not only is spending an extraordinary amount of government money on this broadband initiative but is actually setting out to eliminate competition. The Korean Communications Commission emphasised this to me most emphatically when I was visiting them in Seoul not so long ago. They said, 'Our policy is to promote facilities based competition.' If you want to have a rather bitter laugh, Mr Deputy Speaker, when I was in Shenzhen in the People's Republic of China speaking to telecommunications executives about broadband in Australia and broadband in China, I explained what was going on here. They listened carefully and respectfully and then said, 'We couldn't do that. We're actually committed to competitive markets here in China.' Really! The Gillard government is taking effectively a Cuban or North Korean approach to telecommunications; it is rolling back generations of reform.

Going back to the report, and the coalition's response to it, one of the points that the minority make, and it is a very powerful one, is that there has not been a case made for the need for, or the desire for or the readiness to pay for very-high-speed broadband of 100 megabits and higher to residential premises. Indeed, around the world telecoms firms have been unable to secure any sort of meaningful premium, if any premium, for people to upgrade to those higher speeds. The reason for that is pretty straightforward: geeks and internet aficionados love to talk about so many megabits per second, but for the vast majority of the population that is an abstraction. What they want to know is: what can I do with it? 'Don't tell me how many bits per second I'm getting. I want to know what I can download and what services are available to me.'

The difficulty that telecoms firms face is not the difficulty that advocates of this project face; it is that you cannot identify the applications that are available at 100 megabits per second but are not available at lower speeds—20, 25 or 40 megabits per second—that can be achieved with a much smaller investment. Remember, the most recent research out of Europe by Analysys Mason is that fibre to the home—that is to say, taking the fibre right into people's homes, as is proposed here for 93 per cent of the population—is in the European experience 3.4 times more expensive than a fibre-to-the-node deployment, where the fibre is brought into the field to such a point that the copper loop is sufficiently short—it might be 500 or 800 metres or less—that very high speeds in the order of 40 megabits per second and indeed much higher, as BT is finding in the UK, can be achieved. So the cost argument is pretty basic. It is to say: if, for a third or less of the cost of fibre to the home, you can achieve speeds and connectivity that is well in excess of what people need today and are prepared to pay for, why would you not do that and, then, if there is a market for fibre to the home at a later date, spend the money there. In other words, pay regard to the time value of money.

But the advocates for fibre to the home—and Senator Conroy is a good example of this—will often say things like, 'We are building this to enable us to use in 25 years time the applications that we are not able to dream about today.' I do not know whether Senator Conroy and I are on the same planet, but it is really incredible that a minister of the crown would be talking about spending $50-plus billion for an objective as absolutely ethereal as that.

Senator Ludlam, the Greens' media and communications spokesman, was at an ACAM conference in Sydney recently, at which I was also present, where he made the case for the NBN and the provision of this very high-speed bandwidth. It is important to repeat it here, because it really sums up the recklessness in a lot of the advocacy here. Everybody in the business—and the NBN is included in this—argues that the application this very-high-speed bandwidth will use is in fact lots and lots and lots of video, because high-definition streaming video involves the big files. It is the only application that one could conceivably imagine, other than some very special cases, would occupy very large amounts of bandwidth like this. That has been the experience elsewhere. Those telecoms companies, whether they are in Korea or Japan, that have tried to promote very-high-speed products have sought to bundle them with lots of video. You may well ask whether the taxpayers of Australia should be subsidising this channel to provide more video, but that is what those advocates have said is the killer.

Mr Husic interjecting—

Senator Ludlam said that he did not think that the killer app for broadband was video. He said:

'It is something that will be new—Google-augmented reality, cyberspace bleeding across into the real world, a merging of worlds.

That is the basis upon which the Greens apparently have supported this project. It is extraordinary, and at the time it made me think about the great lines from the opening number in the Rocky Horror Show where the cigarette girl comes out and says:

"But when worlds collide," said George Pal to his bride, "I'm going to give you some terrible thrills."

So we have worlds colliding and worlds merging. Of course, the chorus to that song was 'science fiction', and I fear that that is what the good senator was talking about.

The member opposite who was so angrily interjecting a little while ago was talking about Western Sydney, which he represents. There are many areas in our cities—and, indeed, in our regions—where there are inadequate broadband services. The need to upgrade those services to a very fast speed is undoubted, but a government which was responsible and members of parliament who were careful and thoughtful about taxpayers' money and recognised that their constituents have infrastructure needs over and above better broadband would surely argue for a technological solution that not only delivered the upgrade more quickly but also delivered it at the lowest cost. The answer for Western Sydney is, to the areas that have been poorly served—

Government members interjecting—

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

The members to my right will cease interjecting. I can see your names on the list of the next speakers. You will get ample opportunity to respond in your contributions to this Main Committee.

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

In many markets around the world where this issue of enhancing broadband services has been taken on, the more active trend is not to continue fibre-to-the-home rollouts in brownfield areas, other than in areas which are very affluent where there is a sense that you can generate adequate revenues—and that is essentially what Verizon did in the United States—but increasingly to deploy fibre-to-the-node. The reason for that is that it is so much cheaper because there are far fewer civil works involved, and we have talked about this many times.

The other point is that it is much faster. Some people have poor broadband services because they are on a RIM or because, while they might only be a kilometre away from the exchange as the crow flies, for reasons of topography—a river, a harbour, cliffs or something else—the loop of copper that connects their house to the exchange is very long, perhaps several kilometres. It might be four kilometres—who knows? In those situations, to say to those people, 'You will get a great fibre-to-the-home broadband, but it could take 10 years' is not much of a solution. Inevitably, as the next-generation 4G LTE wireless comes along—and it is being deployed now—it will so rapidly overtake fixed broadband connectivity that by the time fibre-to-the-home broadband comes along it may well be too late. That, of course, is why the NBN is trying to stop Telstra from promoting wireless as an alternative. In other countries, where a more rational approach is taken, incumbents are using a fibre-to-the-node deployment because they want to get in before LTE can seize their customers. Here, while that may not be the prime motivation, the key motivation should be building the solution quickly so that the honourable member's constituents get the broadband they need and get it in a timely way.

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

I was a member of the Standing Committee on Infrastructure and Communications, which conducted this inquiry, together with my colleague the member for Chifley, who is in the chamber today. Can I start by expressing my thanks to my fellow committee members; the chair, the member for Cunningham; and secretariat staff, who not only did an excellent job in arranging the inquiry hearings and extensive field work that we did, providing us with excellent briefing documents, but also assisted in the compilation of this fantastic report. I am sure that I would speak on behalf of every committee member, even those who submitted a dissenting report, in saying that the support provided by the secretariat was nothing short of first-class.

One of the defining features of the first 90 years of this Federation was the willingness of those earlier generations of Australians to make sacrifices for the future generations in aid of nation building. It is because they were willing to make these sacrifices that today we enjoy the benefits of a national railway system, the great railway links between the east coast and the west coast and the north-south rail links. We enjoy, by international standards at least—and by regional standards—good systems of roads and highways and some of the best ports in the South-East Asia region. We have a telegraph and a telephone system which, at least for the first 60 years of Federation, stood out in the region and in this part of the world as one of the icons of development. These things did not happen for any reason; they happened because earlier generations of Australians and their leaders in government had foresight and the willingness to make sacrifices for future generations.

Against this background it is quite disappointing that, when we look at recent ABS data, we see that governments today—and this is governments at local, state and federal level—are now spending $25 billion a year less, in 2010 terms, than they were during the 1960s and 1970s on public works. That is right: we are now spending $25 billion less. This at a time when the income that we are receiving from the resources boom is at record highs. Some estimate that our national income is growing by somewhere in the vicinity of $190 billion per annum. It really is a cause of great shame that this generation of Australians, for a significant part of the last decade, have not shown the same degree of foresight as our earlier generations in investing in infrastructure and public works for future generations.

The NBN, the National Broadband Network, is perhaps a standout example, which runs against the trend of the last 15 years. It has been backed by the Australian people: let us not forget that this went to no fewer than two federal elections. They have backed the government's visionary plan to reverse that trend, that failure to invest in infrastructure, and to build a National Broadband Network, at a cost of $35.9 billion to the Commonwealth, as an investment in our future.

The previous speaker, the opposition spokesperson for communications and broadband, the member for Wentworth, made great fun—great personal amusement, at least—of this investment. He has been carrying on at great length about the fact that what we are doing with this National Broadband Network is effectively building beyond the capacity or need of the current nation. We take a different view. We take the view that what are building by rolling out fibre to the home through the National Broadband Network is actually future-proofing this infrastructure in the same way as those who built railway networks in the early 1900s and telegraph networks in the second decade of the last century ensured that they were future-proofing that technology.

I think of my grandfather when he moved into his first house after he got married. He had two electrical devices: a standard lamp and a wireless radio. They did not have a fridge. They used an icebox back in those days. You can imagine the limitations and the cost to future generations if every house that was built from 1915 to 1930 had only two power points in it. Why would you need more than two power points in a house? Because people only had a wireless radio and standard lamp. Electric refrigerators had not been invented back then. Televisions had not been invented back then. Electric washing machines and dryers had not been invented back then, so why would we need to put more than two power points or design an electricity distribution system when people had no more than two low-voltage electrical appliances in a house? It is absolute nonsense, of course, from what we saw because houses were designed with future-proofing—for example, the capacity to deploy more electrical devices over the next 60 to 70 years. The growth in the electronics industry and in electronic devices in this country is such that they are a feature of every modern home.

It is the same with fibre to the home. What we are doing by delivering a fibre-optic cable into just about every home in the country is ensuring that every Australian has the capacity to benefit from this technology—not just now but well into the future—so that they have access to the new platforms of service delivery and entertainment into the future.

The opposition raises lots of arguments about competition. This is after 11 years in government and, by my count—and the member for Chifley might correct me on this—19 failed broadband plans. We had no more competition in the broadband space and no improvement in the delivery of broadband services to electorates like my own in the Illawarra—the electorate of Throsby—and the electorate now occupied by my colleague the member for Chifley. Broadband services were not significantly advanced over that 11-year period.

What the National Broadband Network will deliver, quite contrary to the contributions of the member for Wentworth, is competition—competition in the delivery of broadband services. No longer will every broadband supplier have to at some point in the connection access the Telstra monopoly network; they will have access to a ubiquitous network with which to deliver their broadband services to end users.

We are delivering real competition and a ubiquitous service. I have to say—and this goes directly to the terms of reference of the committee—this is something that is well understood in the regions that we visited. It would be true to say that, after hearings throughout regional Australia and in most capital cities, we could not find a voice in opposition to what we were proposing to do. We could not find a voice that said what the government was trying to do in providing ubiquitous broadband services throughout Australia is going to be bad for the country. In fact, they were all excited about the proposition. They could see that broadband was going to lead to a revolution in the delivery of e-health services.

We heard evidence from people about being able to deliver internet based monitoring for elderly Australians in their living rooms, delivered by doctors who might not even live in the same state—literally thousands of miles away—providing services that would not otherwise be delivered to those people. Simple consultations are able to be done through video facilities for people who have suffered stroke and need simple diagnostic or therapeutic assistance with their condition. Previously those patients would have had to engage in three- or four-hour round trips from their remote locations to major centres where they could consult with a physician perhaps for five minutes—half a day's trip to have a five-minute consultation and great cost and inconvenience to the individual. That could now be delivered to a person's living room via a doctor who is delivering the consultation from their normal place of practice.

When those opposite mock the fact that the greatest use of this new broadband service is going to be through the delivery of video they miss the real point. Yes, the provision of ubiquitous broadband services will lead to an absolute ballooning in the use of, and the capacity to deliver, video services. But this is not just about home videos and entertainment; this is about a revolution in the way everything from education services to health delivery services and executive board meetings can be delivered down the track.

Those on the other side are probably very familiar with ASX listed companies which quite routinely conduct their board meetings or management meetings by videoconference. They are able to do that because they have the capital and the equipment to do it. What the NBN will deliver is the capacity for small businesses to have meetings with clients throughout Australia and throughout the world and for ordinary Australians to have access to those video-linked services from their very living room.

The evidence that we heard—it is well documented in the majority report—is that the delivery of the NBN is not only going to be a boon for delivery of e-health services but also going to provide great opportunities for the delivery of online training and education services. We heard some fantastic evidence from universities and other training providers about how the NBN would enable the universities to provide services to students who live in remote Australia and give them the access to quality education, lectures and online tutorials that would currently require somebody to live in a capital city or to reside in the vicinity of a university. So it will literally expand the access to those education services to people who currently do not have access to those services.

The NBN closes the gap; it removes the tyranny of distance. My electorate covers the Illawarra, where over 20,000 people daily make the journey from Wollongong or the southern suburbs of the Illawarra to Sydney, Campbelltown or Liverpool for work—giving up four hours a day, almost half as much time as they spend at work, travelling on a train. The National Broadband Network will make the possibility of bringing those jobs into the region—or ensuring that people do not have to stand on that train platform at 5 am every morning to make that trip to Sydney—all the more tangible, all the more possible, all the more real.

This is a region that has recently been rocked by the announcement by BlueScope Steel that it is halving its steel capacity and laying off in excess of 1,000 workers. There is a hope—it is a very real prospect—that the National Broadband Network will be spread from the current trial site in Kiama up to my electorate of Throsby and into my colleague's electorate of Cunningham.

The one thing that stands against the National Broadband Network providing new opportunities to the citizens of the Illawarra and the South Coast, and to the small businesses and the future small businesses of the Illawarra, is those who sit on the opposite side of the chamber and do nothing but bag this, probably because they did not think of it first and probably because they cannot see the benefits. I am sure that if I resided in the leafy inner-city suburbs of Paddington, Vaucluse or any of the suburbs that have excellent broadband service—whether they are delivered by fibre optic cable or wireless—then I would not see the need for a national broadband network. But when I visit towns like Albion Park, one of the fastest-growing suburbs in my electorate, which cannot even get wireless broadband services let alone broadband services by a fixed line then it is a very different story. It is an excellent report and I commend it to the House. (Time expired)

Debate adjourned.