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

This is the first report of the Joint Standing Committee on the National Broadband Network, which is charged to produce a report every six months. Earlier in the year, the committee sought the agreement of the government to ensure that a report on the progress of the NBN build by NBN Co. was given to the committee in sufficient time to enable it to produce its report. No such report was given to the committee by the government or the NBN Co. in time to be considered for this, the first report. Nonetheless, the report was completed in accordance with the statutory requirements setting up the committee.

The government was asked when it would provide its first report to the committee. On 7 July, the two responsible ministers, Senator Conroy and Senator Wong, gave a commitment to the committee chair, Mr Oakeshott, that a report on the progress of the build and the rollout would be provided to the committee by mid-September. Mr Oakeshott responded with thanks and convened a meeting for 20 September to enable consideration of the report. The hearing was duly held on 20 September but no report was provided. We were told by Mr Quigley, the Chief Executive Officer of NBN Co. that a report of some kind had been given by NBN Co. to the government in August but the government had declined to provide it to the committee, and no assurances as to a particular date for providing that report to the joint committee have been given.

The government is treating this committee with complete and utter contempt. The NBN Co. is, for all practical purposes, unaccountable. The government chose to establish this massive, new government telecommunications monopoly, the largest infrastructure project in our nation's history, without doing any cost-benefit analysis, without ever asking the question: is this the cheapest, the fastest or the most efficient way of delivering fast broadband to all Australians? This scheme was apparently—and it has never been denied—concocted on the back of a napkin between Mr Rudd, the then Prime Minister, and Senator Conroy on a flight between Sydney and Brisbane. No proper analysis has been done, and the coalition's attempts to have this project considered by the Public Works Committee in the normal way were frustrated by the government and their partners, the Greens and the Independents.

The only mechanism for parliamentary accountability for this vast project is the joint committee, yet we have nothing beyond a few generalities from the NBN Co. There is no report and no detail. This is a venture that belongs to the Australian people entirely but the government is treating the representatives of the Australian people with contempt. The ministers gave an undertaking—their words, not mine—to produce a report for the committee by mid-September and then failed to do so. How can the committee do its work if the NBN Co. is not able to tell us what is going on and if we are not able to get access to any reliable information on their activities? These and other concerns of this kind have been raised by the coalition in this report. The report is, on any view, an inadequate document. It has to be an inadequate document because we have not been given the material to enable us to do a report. We are being held in contempt by the government and the NBN Co.

One of the remarkable features of the government's arrogance in respect of this matter—and, I may say, the NBN Co.'s equal arrogance—is a refusal to recognise that the approach they are taking is utterly unique in the world. There is no other country in the world where a government is spending so much money on broadband services and no other country in the world where a government is building a new telecommunications monopoly. And this is the feature of this project that is absolutely staggering: there is no other country in the world where a government is using legislative and financial power to eliminate competition with the fibre-to-the home network it is building. The hybrid fibre coax network, which passes 30 per cent of Australian households, is, by reason of agreements between the NBN Co, Telstra and Optus, to be decommissioned so that it cannot be used to deliver broadband services. The only justification for doing so—as we note in this report—is the financial position of the NBN Co. At page 68, in the coalition dissenting report, we note:

... Treasurer Wayne Swan and Communications Minister Conroy have explicitly conceded that—

the agreement to put the HFC network out of operation—

... was designed to boost NBN Co‘s revenue and take up:

"The Optus agreement to migrate its HFC customers to the NBN and to decommission its HFC network will provide greater certainty about NBN Company's revenue."

That is what it is all about. We need to be aware in this place that there is a very big debate going on around the world in telecommunications about the wisdom of fibre-to-the-home rollouts and around the world telcos are starting to rethink the need for fibre to the home and are questioning whether there is in fact the justification for doing so when there are cheaper and faster methods of delivering broadband upgrades, whether through fibre to the node—bringing the fibre further into the field so that the copper loop is sufficiently short to enable very-high-speed bandwidth to be delivered—by upgrading HFC networks or indeed by the use of 4G wireless networks, which are being rolled out now and which offer the promise of very-high-speed bandwidth.

I refer now to a very recently published report by one of the leading technology consulting firms in the world, Analysys Mason. They pose the question:

Is FTTH really the end game?

Even proponents of a steady, incremental approach to fixed-line access evolution tend to offer the caveat that 'FTTH is still the endgame', often on no firmer ground than it is obviously faster, therefore better, and therefore it is where networks will end up at some time in the future.

They go on to say, 'This deserves to be questioned.' They note that:

Willingness to pay extra for more speed or capacity appears to have dwindled to more or less nil. In a competitive market this means that additional access infrastructure capex has to be justified more often as defensive spend, and ROI increasingly depends on net ARPU—

that is, average revenue per user—

above what it would dwindle to rather than incremental ARPU. Investing in a zero-sum-game market is less attractive than investing in one with real growth.

What they are saying here is that increasingly the justification for doing fibre to the home is to defend yourself, if you are a telco, against competition from other methods of broadband access. The problem with that is that the fastest competition in terms of deployment is LTE wireless and they note that speeds are being marketed of up to 100 megabits per second. That puts wireless in a position, recognising its limitations—and we all understand that it is a shared medium—in a very competitive position. The proposition in favour of fixed line services of fibre to the home is that there is an insatiable demand for speed but around the world telcos, as this report notes, are not seeing that. They note here that:

Two years after launching high-speed access, UK cableco Virgin Media reported that only 3% of its broadband subscribers took a 50Mbit/s service.

And the universal experience seems to be that customers will not pay a material premium for very high speeds. When you look at the penetration of, say, 100-megabits-per-second services in this region, in Japan and Korea in particular, almost invariably the 100-megabit-per-second product is being taken up because it is either the entry-level product or because it is priced at effectively the same price as the entry-level lower speed. Where you do have tiered pricing—and this is true in Korea in particular—where you have, say, a 50-megabit-per-second service and a 100-megabit-per-second service which is $4 or $5 a month more expensive, the 100-megabit-per-second service is able to achieve only about a 15 per cent market share. Of course, what that is telling us is that the applications that make these very high speeds useful or desirable are not there. You can, of course, take the approach of saying we should just build out the capacity in the hope that in 20 years time the applications will arrive, but that is obviously a reckless approach to spending public money and also one that pays no attention to the time value of money.

So in this report Analysys Mason say:

The disproportionate spend on FTTH … is highly problematic, and may come to be seen as inappropriate use of capital in the emerging competitive environment.

They say:

I will conclude with another observation from this report:

The recent emergence in some markets of LTE mobile broadband will serve to encourage fixed operators to press ahead quickly.

The need to press ahead quickly, of course, speaks to the need to deploy fibre to the node, which can be rolled out very quickly compared to fibre to the home because there is so much less civil works involved. This is why HFC upgrades such as DOCSIS 3.0 cost, say, $70 per household passed, a tiny fraction of the cost of rolling out fibre to the home—and it can be done quickly. Analysys Mason go on to say:

LTE mobile broadband could function as an effective substitute to ADSL2+, and fixed operators need to differentiate. However, LTE will take less time to roll out than FTTH and therefore fixed operators need to act fast.

So here we are in Australia, courtesy of this government, proceeding down the road to this huge fibre-to-the-home rollout, whereas in the rest of the world it is increasingly under question. It just underlines the need for a rigorous cost-benefit analysis and appropriate respect and accountability to this committee.

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

I find it very interesting—and I believe the member for Chifley would agree with me—that the member for Wentworth claims the committee is being treated with contempt when he has nothing but contempt for this project. Nothing in the comments that he just made would indicate anything else. In fact, the sun would not be coming up—it would not be a proper day—if we did not have the member for Wentworth bagging it. So it is good to see that we are on business as usual. He talks about the committee not being provided with enough information, he thinks, to give a proper report—as if, irrespective of any other information, he would need another reason not to support this project. His complete obsession with micromanagement of a project which, when they were in government, they could not even deliver after 12 years and twenty-something goes is beyond the pale.

I will address in passing some of the other comments by the member for Wentworth. I want to address a few, because I have heard them about 20 times already this month. There is a reason why this project is unique and why Australia is continuing down this path. And I do not need any other endorsement—although endorsements have come from far and wide from analysts around the world—than that of the ITU, the UN's telecommunications section, who came out a few months ago and said, 'There is a reason why Australia needs this project and there is a reason why this project needs to be structured in a unique way.' That is because of Australia's topography and its markets, because of our legacy in having the CAN and a vertically integrated operator for so long and because of the failure to deliver equitable access to high-speed broadband services to date. That endorsement was given by the ITU secretary-general himself. In fact, in comments he made when he came to Australia he said that he foresees that, in the next couple of years, Australia will make it up the rankings, gradually, from being one of the least effective countries in terms of broadband penetration to being the leader in the world, and the only way he thinks this can be done is by having the project that we have in place. So I take that endorsement on board.

The member for Wentworth talked about monopoly structures and behaviours again, as if we have not heard that before. The fact is that this is the most pro-competition option possible. By separating the access network from the services layer, we are able to disinfect the effects of vertical integration that have permeated the system to date and have led to a situation where we have not had competition either in infrastructure or in services based competition and where we have not had equality of access for regional and remote areas in particular—and, as the member for Chifley and I well know, in outer metropolitan areas of Sydney. So this is the only way in which we are going to be able to deliver that access.

I also take issue with the member for Wentworth continually bringing up the debate on fibre versus wireless. The debate is over. It has been done. I bet, if he kept reading from that analysis report, it would conclude by saying, 'Fibre and wireless based services in a high-speed broadband world are complementary.' They are complementary, not substitutes for one another. He also talked about fibre-to-the-node versus fibre-to-the-home analysis. Firstly, none of this is new. In my former life before this place, when I was working in the mid-2000s in Malaysia, developing their high-speed broadband, we canvassed all these issues. This is absolutely nothing new. But what is important and what we actually concluded in our analysis for the Malaysian regulator, in rolling out the system—and, I know, as has also been analysed by other countries in our region who have done their rollouts, like Singapore and South Korea—is that you need to structure the most appropriate system of broadband access for the country in question. There is no question that the solution that is adopted in Singapore, South Korea, Japan and elsewhere, given their scale and topography, is going to be different from that in Australia.

I was startled to find that the member for Wentworth has finally come to the realisation that spectrum is a shared resource and has technological limitations. Fibre is in fact the only technology-neutral platform that is available, because once we have the infrastructure in place (a) nothing is faster than the speed of light and (b) whatever you would like to do using that infrastructure, be it through wireless or other solutions—and that is why we have mobile operators welcoming the NBN; they will be able to fibre up their base stations even better, thanks to the NBN—we have the ability to put the electronics on either end and do whatever we like with that bandwidth.

There are all these arguments. It would not be a normal day without the member for Wentworth, firstly, bagging the NBN and, secondly, being behind on the technology.

Mr Husic interjecting—

As the member for Chifley reminds me, Mr Turnbull ran a very good dial-up company, so of course he knows more than the rest of us!

I support the recommendations in the joint committee's report—I think the member for Wentworth touched on the actual report for about two minutes—and I want to single out a couple before I turn to the dissenting report. One of those recommendations is that 'government agencies take measures to ensure they are ready for the rollout' of the NBN and to ensure appropriate government service delivery. This is a really important point, and for me it goes to something local as well. I have a new estate, The Ponds, in my electorate, which, because of the foresight in putting the fibre mandate on the ledger sometime ago, has been developed with relatively good fibre rollout, unlike other areas such as Kellyville Ridge, and Woodcroft in the member for Chifley's electorate. In the last census, apparently The Ponds was one of the highest users of the e-census option in Australia. It demonstrates the power and importance of governments being able to tap into the lives of everyday citizens and make jobs easy. It is not just about online payment; it is about the whole interaction that we have with government. How many people would have been at home when the census collector came around? I know they came around twice to my place and, of course, I was not home either time. We completed it online. I think this is a very important point and a very strong recommendation that needs to be taken on board.

Secondly, I note the recommendation regarding the resources taken to complete the binding agreements and increase the POIs from 14 to 121. This is really important because it demonstrates the rigour of the ACCC, as the regulator. How many times in this debate have we heard people say it is going to be anticompetitive because the ACCC has no teeth? This POI decision demonstrates the very forward looking and commercial understanding that the ACCC has applied to this. That is a very important recommendation.

There is a recommendation that NBN Co. publish time frames for regional and remote areas, which is very important. I note this was raised in the regional consultations that have been made to date. I will touch on one alluded to by the member for Wentworth. There is a recommendation that the minister publish a detailed statement outlining the productivity, jobs and competitive benefits of the rollout of the NBN. I do not think that will take minister very long to do at all because—and it is important to put this in context—we have a debate going on in parallel where the opposition wants to bring back some of the worst elements of Work Choices, including individual contracts, on the basis that they get told by people in their electorates that we need to increase productivity.

Google has done a very detailed study into the value of the internet to the Australian economy and says that already the digital economy, of which the NBN will be one of the key drivers if not the key driver at least in infrastructure, contributes $50 billion to our economy or 3.6 per cent of GDP. If you want to talk about increases in GDP in this country and productivity improvements, you do not do that by stripping away workers' entitlements. You do it smart by investing in ICT because we know that this is where the highest productivity improvements and the most long-term benefits come from.

I also take issue with some of the comments that the member for Wentworth made and some of the items that the opposition have put in their dissenting report. On page 60, the opposition maintains its position that a national fibre to the home network is incapable of being financially viable or delivering affordable services. This is their running argument with the implementation study. It is like the Japanese soldier lost in the jungle after the war—they are still running around criticising the implementation study when it has been and gone. On page 60 the member for Wentworth, as the author of this dissenting report, says:

… price is the biggest barrier to internet uptake in Australia.

I do like how he continually refers to broadband as 'the internet' rather than anything else. Recently at an industry forum, one eminent industry leader commented to me that it is amazing how the member for Wentworth still thinks the NBN is just about 'the internet'.

As the ACCC's infrastructure report has consistently displayed, the issue is not just income. The issue is the lack of facilities-based competition to date and that has been the core of the access block. Without competition at the facilities level, combined with the legacy of Telstra's vertical integration as the owner of the CAN, service based competition has been severely impeded in this country. Do not take it from me. You only need to look at the ACCC's decision to maintain the declaration of the Domestic Transmission Capacity Service and its rationale in maintaining the declaration, so maintaining regulation of the DTCS. Facilities based competition remains at the remit of regulatory oversight for a very good reason—intercapital city infrastructure, as one example, is at the heart of competition to deliver affordable and competitive services. We have the old cost-benefit chestnut, which was discussed by the member for Wentworth, which is noted on page 61 and onwards. I find the cost-benefit argument that the member for Wentworth keeps coming back to really interesting, particularly because I did not pick him as a conspiracy theorist. On 7 September at the ACCAN conference in Sydney the member for Wentworth said, amongst other things, that there were no applications forthcoming that could take advantage of the huge bandwidth being made available. I will have something to say about that in a minute. He then went on to talk about the NBN being 'a conspiracy.' It was reported that the member for Wentworth said:

Let me tell you who the conspirators are. They are the vendors, who want to sell lots of kit for the NBN. They'll tell you privately they think it's bonkers, but they want to sell the kit. There are the over-the-top people like Google and Yahoo and media companies.

There is so much more that I could say on that point but I will just report back on the cost-benefit analysis that has already been done. I have brought this to the attention of the member for Wentworth on several occasions but he obviously chooses not to read them. The Access Economics papers prepared for the department, which are publicly available and very recent, estimate:

… the steady state benefits to Australia from wide-scale implementation of telehealth—

using high-speed broadband that only the NBN can deliver—

may be in the vicinity of $2 billion and $4 billion per annum.

That is every single year. This thing pays for itself.

The member for Cowper would be interested in this. Another teleworking paper that Access Economics has done talks about the importance of infrastructure savings, saying:

… these flow from both teleworkers not using road transport during peak periods, reducing the need for road maintenance and upgrades … and from population decentralisation as teleworkers can live outside of major city centres. As the expenditure on road infrastructure in Australia in 2007-08—

in 2007-08 alone—

by governments totalled about $13.2 billion … this gain is potentially large.

Time and again, we hear the member for Wentworth coming in here and saying, 'We don't know why we need the NBN; we haven't had a cost-benefit analysis done on it.' It is the same old story.

I would like to bring something else into context in the last minute that I have, and that is a social inclusiveness. I know that during the last couple of months a lot of us have been going around our electorates talking to disability carers and people with disabilities. We have only to look at the 2007 OECD publication about the digital inclusion perspective, which analysed particularly how high-speed broadband networks of the type that the NBN is, to see that they have the potential to markedly improve the lives and life chances of all people with disabilities. That is yet another reason why I have been such a vocal advocate for the NBN. I note that the potential for social inclusiveness for people with disabilities can never be measured solely by economic analysis. I know that, as the National Broadband Network continues to be rolled out, we will continue to see those benefits flow through to Australian citizens. I commend the report to the House.

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 debate and note this report. The purpose of the report is to provide advice to parliament on the largest infrastructure project in the nation's history. This committee has the responsibility of providing reporting in a timely manner. This committee has the responsibility to keep the parliament and the Australian people properly informed of the status of the project. The committee has the responsibility to highlight deficiencies identified in the rollout of the project. Regrettably, this report rambles on, page after page, and says absolutely nothing. It gives the reader no insight into the progress of the project. It is a document that does nothing other than repeat and bring together material already in the public domain. This is a project that is behind time and over budget and that is not achieving the take-up rates projected in its own business plan. It is a significant failing that in the first report the committee has not addressed the issues of time, cost and take-up rates—the very foundation stones of the success or failure of the National Broadband Network project. The report does not even inform the parliament of the expenditure to date on the project and where those funds have been spent. At the earliest meetings of the committee certain key performance indicators were requested. It is now 22 September and NBN Co. and the government have failed to deliver on their undertaking to provide KPIs to the committee's meeting of 20 September.

I quote the words from the report:

At the committee's 16 May 2011 public hearing, NBN Co stated that it was reviewing 'a number of KPIs with the NBN Co Board.'

I quote from the report again:

Later at the committee's 5 July 2011 public hearing, the NBN Co indicated that it had been working closely with the Government to develop KPIs. The NBN Co stated that once this process was complete, that the Government would consult with the committee …

It is now 22 September and we are still to receive the promised information. That is timely, responsive reporting of the ilk that Sir Humphrey Appleby would be proud of. It is the largest infrastructure project in history, and the government and NBN Co. can spend six months deciding what the KPIs might be. It is little wonder that this is a project running behind time. It is reasonable to assume that the reason the key performance indicators have not been provided is that this is a project that is failing.

On 1 April this year we had the construction tender process collapse and be abandoned. Tenders were massively over budget. We had 14 tenderers, all notable industry players, who came up with a set of numbers vastly different from the project budget. And what can we conclude here? Was there collusion between the 14 tenderers? There was no ACCC investigation and apparently no evidence of that. Was the budget inadequate? The government claims the budget is totally adequate, but I am yet to be convinced We have a tender process which was abandoned and a government claiming that the project is still within budget, yet we have not a word on this in this waffling report.

And then along comes Silcar and everything is fixed; magically, a deal is done within budget. I thought Christmas only came once a year, but there we had a tender process collapsing and, miraculously, out of the blue on the white horse came Silcar. We have a joint venture between Siemens and Thiess which can allegedly deliver the project within budget. I say 'allegedly' because we just do not know and there is nothing in this report that makes us any more confident. We do not know anything about this contract that has been let to Silcar. In the true spirit of the NBN, there is a veil of secrecy and concealment. We do not know the risks that NBN Co. have taken on to achieve this somewhat miraculous change in the value of the construction tender. We do not know who is taking the risk in changes in the cost of labour. We do not know who is taking the risks on the increases in the cost of materials and equipment. We do not know who is taking the risk with regard to extension of time, industrial disputes, bad weather or site conditions. We just do not know, and this report is silent on this very important issue.

Wouldn't you think that, if you have the largest infrastructure project in this nation's history and you have a major collapse in the construction tender process, it would warrant a few lines of consideration? Wouldn't you think that a committee that has the responsibility of reporting on the status to the parliament would at least raise it and deliberate on that? But no: the report is silent on that issue. The fact is the headline price arrived at with Silcar may be nothing more than a carefully contrived illusion designed to get an incompetent government out of a mess of its own making. The reality is the real cost of this contract may be far greater when all of the risks are finally monetised—a very important point. And did the report properly consider this important issue? Alas, as I said, it did not. Let me look at take-up rates—a vitally important issue and a key foundation stone for the revenue projections in the business plan. It is interesting to note that it would be reasonable to expect that a project with the qualities espoused by the government—the NBN that the country cannot be without—and with all the publicity there would be a stampede to get connected, that people would be knocking Senator Conroy over in the rush to get connected to the NBN. When the Apple iPhone was released, people queued in the snow to buy one. They were so keen to get this new technology, they queued in the snow to buy one. Yet Senator Conroy is struggling to find a queue of people who want get connected to the NBN. He cannot even find a queue.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

It's a white elephant.

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

Yes. When Armidale was connected, the first mainland site to be connected, it is interesting to note that there were fewer customers for the NBN than there were passengers on the Prime Minister's jet that flew to the launch. We all remember the magnificent seven—seven customers for the mainland launch of this new technology. Wouldn't you think that the current take-up levels—the slow rates in Tasmania and in the mainland sites—would be sounding alarm bells to the government and NBN Co. management?

In giving evidence to the committee on 5 July, our good friend Mr Quigley was able to inform us that 14,256 premises had been passed by NBN Co. to 30 June 2011—not 14,257, not 14,255 but exactly 14,256 premises passed; not connected but passed. This compares to the 13,000 projected to be passed under the corporate plan by that date. It is pleasing to note that there is something in this project that has been reported as being ahead of expectations. In response to those 14,256 properties passed, my colleague the member for Bradfield, asked Mr Quigley, 'How many retail customers does the NBN have?' The answer was that he did not know. He knew 14,256 houses had passed by 30 June, but he did not know how many customers he had.

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

Because they are wholesalers.

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

You have had your turn. It is a major factor that you need retail customers to buy from wholesalers.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Order! Member for Cowper, I have not had my turn. You must speak through the chair not to each other across the chamber. I represent the parliament here.

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

The member for Greenway had her turn and I invite you to stop her interjecting, Mr Deputy Speaker.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Just speak through the chair, thank you.

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

We have a CEO of the largest infrastructure project in the country who does not how many customers he has. I must say that is the level of competence you come to expect from this government and the NBN Co. I guess he had what you could term a 'Costa Rica moment'. You know Costa Rica—that small Central American country with 4.6 million people and the $40 billion of GDP that he forgot he was responsible for in his time at Alcatel. He had a Costa Rica moment. I anticipated that he could have such a Costa Rica moment, so prior to the committee I got my adviser to ring NBN and ask a very probing question. So he rang and asked, 'Could you tell me how many customers you have?' The answer came back, 'I don't know.' So not to be put off by this minor setback, he then said, 'Could you put me on to someone who can tell me how many customers you have?' The person at the other end of the phone not only did not know how many customers they had but also had no idea who in NBN Co. head office was responsible for knowing how many customers they had. So the CEO and NBN Co. head office do not know how many customers they have. That is the management control. We have no advice in this report.

Member for Chifley, do you not think that the report should have made some comment on how many customers the NBN has, given the significance—

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

No, don't ask the member for Chifley. He will respond to you. Don't ask him. Speak through the chair.

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

I said 'Member for Chifley'.

The DEPUTY SPEAKER: You have invited him and he will report, and I don't want him to, thank you.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Sorry, Mr Deputy Speaker.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

No, you're not.

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

I am sure he is not, Mr Deputy Speaker.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Just continue.

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

The report did not even countenance the fact that the take-up rate was abysmal; that the CEO did not know how many customers he had and that it displayed a lack of competence which is almost incomprehensible. It is of great concern. We have a report that remains mute on the very issues of concern about which this parliament should be informed. We have a report that is about as relevant to this parliament as a travelogue of Sardinia. Really, Mr Deputy Speaker: if it is an item of importance, it is not referred to in the report; if it is an item of gratuitous waffle, it is there on page after page.

It serves little purpose to repeat the information and documentation that is available in the public domain. That is not the role of the committee. The role of this committee is to report in a timely way on those matters that are of importance to the parliament—and the matters that are of importance are the timing of the project, the cost of the project, the impact of the take-up rates on the revenue projections of the project—so that the parliament and the people of Australia can know how this project is progressing. We do not want hundreds of pages of gratuitous waffle.

This is a report that fails every test in relation to providing meaningful information on the largest infrastructure project in this country's history. We have the government and the CEO of NBN Co. attempting to deceive the Australian people with regard to the status of this project. We have a report that assists them in that deception and concealment. This report fails the test sadly. The parliament deserves timely and relevant information. Despite the best efforts of the coalition members in producing the minority report, this report in fact falls far short of what is required for a project of this size.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

I appreciate the opportunity to follow the member for Cowper in speaking to this report. It is no surprise at all that the opposition members would get up and criticise this report. It is no surprise at all that the opposition would put in a dissenting report. I think the member for Greenway put it very succinctly today when she followed the member for Wentworth: the fact is that the opposition are fundamentally opposed to this policy reform.

It is unfortunate that a committee of this nature, with the important role that it has before it, could not operate in a bipartisan way. But the reality is that you have members on this committee whose sole intention it is to ensure this reform does not go ahead; to spend all of their time questioning witnesses as to whether there is not another course that we can follow—that is, going outside the terms of reference, not looking at whether NBN Co. and the government are fulfilling the commitment the government made to the Australian people, which the Australian people fully embraced, but instead trying to say, 'That's not what we need.' We heard it from the member for Wentworth today. I did not catch all of his speech, but I am not surprised that the few seconds I caught talked about fibre to the node once again.

The fact is that we are not as a committee investigating whether there are other options to fibre to the premise. Our responsibility as a committee is to look at what the government committed to deliver in announcing the rollout of the NBN and the establishment of NBN Co. and make sure that we are fulfilling the commitment we made to the Australian people. In fact, according to the resolution of appointment, the committee's responsibility is to report every six months to this parliament, commencing 31 August 2011, until the NBN is complete and operational. The resolution also says:

… the Committee—

shall—

provide progress reports to both Houses of Parliament and to shareholder Ministers on:

(a) the rollout of the NBN … in relation to the Government’s objective for NBN Co. Limited (NBN Co.) to:

(i) connect 93 per cent of Australian homes, schools and businesses with fibre-to-the premises technology providing broadband speeds of up to 100 megabits per second, with a minimum fibre coverage obligation of 90 per cent of Australian premises; and

(ii) service all remaining premises by a combination of next-generation fixed wireless and satellite technologies providing peak speeds of at least 12 megabits per second;

(b) the achievement of take-up targets (including premises passed and covered and services activated) as set out in NBN Co.’s Corporate Plan released on 20 December 2010 as revised from time to time;

(c) network rollout performance including service levels and faults;

(d) the effectiveness of NBN Co. in meeting its obligations as set out in its Stakeholder Charter;

(e) NBN Co.’s strategy for engaging with consumers and handling complaints;

…   …   …

(g) Any other matter pertaining to the NBN rollout that the Committee considers relevant …

This is the resolution of appointment for this committee, not what those on the other side want it to be. They are running off on tangents all the time just to prove that they have another idea. Their idea is not as good. It will not deliver the speeds that the NBN Co. will but it is cheaper. That is their entire policy: 'It's not as good but, hey, it's cheaper.' That is their selling point. Well, I can tell the member for Cowper, who uses the analogy of people lining up outside the doors of Apple wanting an iPhone or an iPad but of people not lining up at Stephen Conroy's door—

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

They're not. You can't give it away.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

Can I advise the member for Cowper that people are wanting the NBN, people are banging on our doors saying, 'It cannot happen soon enough.' It is a shame that the member for Cowper was not at the inspections in Broken Hill, because he would have heard the evidence from the council and from many other witnesses saying, 'We can't have it soon enough.' That is what everyone is saying. They are saying: 'We know it's great; we can't have it soon enough.'

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

How many customers do you have? Tell us how many. You don't know.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member for Cowper, there should be courtesy in this place and you know it. You do not need to shout. You have made your point so, please, let the other speaker speak.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

The NBN is so popular that the member for Brisbane is complaining that her electorate is not getting it in the second stage. In fact the member for Brisbane has come out complaining that her previous constituents in Petrie are getting it. She is complaining about the people who would have for 11 years complained to the then member for Petrie about the poor access to fast broadband.

Honourable members interjecting—

I hear it every day. I heard it as a candidate in 2006 when the member for Brisbane was the member for Petrie. I heard it in 2007, in 2008, in 2009, in 2010 and in 2011. They continue to tell me about the black spots and the huge problems with broadband access, but we have the member for Brisbane—who has stood up in this place, who has made statements outside this place and said how unhappy she is that her constituents are not getting it soon enough—saying how unhappy she is that her past constituents are getting it. I find it amazing that a member who represented the people of Petrie for over 11 years is now complaining that they are finally getting what they deserve, which is fast broadband. I am proud to be the member for Petrie who will be delivering that for them and proud to be part of a federal Labor government that is committed to delivering the National Broadband Network.

I want to support the statements already made by member for Greenway, who certainly has a lot of experience in this area. I want to acknowledge the government members on this committee, who come to this committee with a genuine commitment to see this reform rolled out. Importantly, we aim to do our job as a committee properly to make sure that it is rolled out in the best interests of the Australian people, and that NBN Co. and the department do their jobs properly. That is the role of the committee, and we are making sure that we are doing that by fulfilling our roles on the committee, as is the chair of the committee. And I thank the chair, the member for Lyne, for his work on this committee. He is genuinely committed to seeing the NBN rolled out because he understands the benefits of this. They are not just benefits to householders. Again, we are not talking about someone being able to download fast emails or a movie; we are talking about the benefits to health. Only a week ago, we had a display about eHealth, and it was absolutely incredible. If you look at what is already being done in the area of health and talk to the experts about it—and we had some evidence in Broken Hill from the Flying Doctors and other regional health services—you realise how important it is. It is not just important but imperative that they get that fast broadband so they can start delivering better health services in our regions. There are people who have to travel thousands of kilometres to see specialists and have to be away from their homes and families for a lengthy period of time who could get assistance in their home town—in their homes, even—with the facilities that come with fast broadband technology.

The NBN will enhance education. The fact is that there are endless opportunities when it comes to education. In our schools, our students who are doing languages are getting online now and communicating in real time with students across the other side of the world. The ability for our education and higher education to expand with faster broadband and newer technology is incredible. We had the opportunity to talk to Nextgen, who had just switched on their new trial of what they say are the fastest speeds in the world—it was a world first—in this tiny room in the middle of Broken Hill with just one little box on the floor. It was hard to imagine what it could achieve, but we went into town and we saw the small box on the footpath and were amazed at the fact that that will be able to connect every single premises in Broken Hill to fast broadband. I know that the businesses and the council in Broken Hill, and the member for that area, cannot wait to get fast broadband there. Members from regional areas understand that. If they do not understand that, their constituents should be asking why they are not out there fighting for this, sooner than later, because it is the regional towns that will benefit most from this.

In Broken Hill, they are building a huge film studio. They have been able to obtain one of the old power stations. It is being refurbished and it is going to be used as a major film studio. One of the huge drawcards for that is that, when they have fast broadband, they are going to be able to send the films straight back to the US—not the old canisters anymore; they can send the films straight back through the internet. This is huge for Broken Hill, it is huge for the outer regions and it is huge for the country as far as our economy is concerned. But the opposition just do not get it. They do not understand what this is all about.

There is no doubt that there are issues of concern, and they came out of the submissions and the evidence of witnesses to the committee. The thing that jumps out at me the most is the need to improve communication and information, especially out into those regional and rural areas. There is still a lack of information about the benefits of the NBN, how it will be rolled out and what stages there are. I know that that information will be coming in the future, in terms of future plans and time frames, but we need to go out and talk to people about the benefits and how it will work, about who is going to get fibre to the premises and who is going to get wireless.

We have been talking about which towns and outer regions will get wireless and which will get satellite, but we have to actually go into those towns and areas and talk to the people about it to make sure that they have the correct information. During the committee inquiry, we heard evidence from a person who is involved in the School of the Air that the School of the Air had concerns that their service would decrease as a consequence of the interim satellite. However, from evidence put before the committee just this week, we have been able to clarify with NBN Co. that the School of the Air's understanding was incorrect. In fact, they are not even on that satellite system; that is going to be changed over, so there will be no impact on them at all. But it is about getting the correct information out there.

I had the opportunity to go out to Brunswick. It was really unfortunate that there was not one member of the opposition who came out to do those inspections with us. We talked to representatives from Telstra and NBN Co. who were working together. There was a small Telstra substation there, and we went into this building and saw the rows of copper leads going everywhere. They said that this massive row of tangled wires basically covered about 16,000 households. Then they took us over to two cupboards that had little boxes in them. They said they would cover 29,000 homes. They showed us out on the street how the individual premises were connected. It was explained to us by both the NBN Co. and the Telstra representatives that copper can be damaged—it can be damaged simply by floods, by excessive water. The only way to damage fibre is to actually cut it. They said that, even if the fibre to the premises is cut, within half an hour they can have it up and running again. There are huge benefits coming from this NBN project.

The committee has made the decision to change its reporting cycle so that we will be reporting again at the end of this parliamentary session—there will be two reports handed down this year. This will be important because we will be getting the report from NBN Co. that sets out the key areas that the terms of reference address, and we will be able to report to this parliament about the key milestones that we have been talking about.

This is an exciting and extremely important reform for this country. I am pleased to be deputy chair of this committee. I thank the committee members who are genuinely committed to seeing this policy reform roll out in the best interests of this nation. It is my pleasure to commend the report.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I remind members that, while I am the first to enjoy an exchange, if they seriously want to make a statement during a contribution they do have the right to intervene. So, if they want to interrupt, they should do it formally and with courtesy.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I will bear your comments in mind when I am occupying the chair. It is a very good principle. I notice that the member for Petrie, the deputy chair of the Joint Standing Committee on the National Broadband Network, is leaving the chamber. That is a disappointment because she raised issues that I have to confront in a rural and remote electorate extending from just west of Brisbane all the way to the Northern Territory border. She spoke about the benefits of the NBN for e-health, the Royal Flying Doctor Service and distance education. I will be with those rural and remote communities this time next week looking at these very issues, including the issue of the rollout of digital television—which is an absolute disgrace. This government has ignored the wishes and concerns of those communities in remote parts of Australia—the small communities that are being offered a satellite-only service when they have had analog rebroadcast for years and years. It is the rebroadcast that they want, not satellite dishes on private homes. There is a very real issue here that we cannot get the Minister for Broadband, Communications and the Digital Economy to listen to. I hope he will listen to these concerns at the local government conference which will be held on the Gold Coast in two weeks time. I know there is a real worry in those remote communities that this government is not listening to their concerns, whether they be concerns about the digital television rollout or the fibre optic high-speed internet rollout.

I am not opposed to high-speed internet. I have been driving this agenda on our side of the House almost since I came here. I know the benefits of communication—it is a vital link with trade, education opportunities and health. What we are opposed to is the model and the lack of transparency being proposed under the NBN. We heard the member for Cowper talk very eloquently about this. We want answers. After all, there is a commitment to spend something like $50 billion in this major infrastructure project. Surely there should be transparency and the community and the people—the taxpayers of Australia, the shareholders of NBN Co.—should be entitled to know about some of the rollout proposals and about the take-up that is occurring as the program is rolled out. We acknowledge it is a massive investment, but it should at least be subject to a cost-benefit analysis and transparency so that the taxpayers of Australia can understand and judge for themselves whether this is a good business model or a flawed business model. Any business would be doing due diligence or a feasibility study in relation to a proposition so big—or not even as big as this. Any business, small or large, before they make that investment would be doing due diligence as to whether there is an economic model that stacks up.

The member for Petrie, the deputy chair of this committee, spoke in glowing terms about this rollout into rural and regional Australia. Can I just say that I represent a rural electorate. I hope that the members from the regions of Melbourne and Sydney, with their city-centric thinking, might just listen for a moment. I would invite them to come out and talk to these communities in remote parts of Australia and live the life for a little while. They might then have an understanding of what people like me are talking about, because we understand the challenges and we also understand the importance of high-speed internet for those people, particularly in remote parts of Australia. Unlike this model from the government, we said that under our plan we would be building the network from the inside of Australia to the outside. But what this government is doing is rolling it out in some key marginal seats, including the seats of the Independents who gave this government government. It is very cosy. It is a bit like the Regional Development grants that have recently been rolled out. What a disgrace that was.

Anyway, I go back to the point that next week I will be out with these communities in far western Queensland, including one large pastoral property where the children have access to their education source through the School of Distance Education. I will be going to towns where the Royal Flying Doctor Service will be conducting clinics, which they do out of Charleville. Every day they are available, 24 hours a day.

Only last month I was out in Birdsville in the far west of my electorate with the Leader of the Opposition. There we sat down at the Birdsville Clinic with the Royal Flying Doctor Service and the clinic nurses. They explained to us that, whilst they have a fortnightly clinic at Birdsville, they are available 24 hours a day, seven days a week, and they are only two hours away by aircraft if they get the call from the clinic in Birdsville. But it is not just Birdsville; it could be other communities out in the far west of my electorate and other parts of Australia: Bedourie, Windorah, Jundah, Eromanga, Thargomindah and all of those remote communities, including some of the remote pastoral stations where the Royal Flying Doctor Service are available 24 hours a day, seven days a week, whenever they get the call.

They explained to us the benefits of e-health. I will preface my remarks by saying that Birdsville and that far western part of my electorate are connected by radio links to the mainframe, if I could put it that way. The mainframe is the optic fibre network that extends across this nation; the Telstra legacy optic fibre interconnects between communities. These communities out there are connected by a radio signal—a microwave link. The clinic nurse said that, if they get a situation where they have a person who presents at the clinic and they take an X-ray of the situation that they are concerned about, they will transmit it to the Royal Flying Doctor Service or a medical practice far to the east, in a capital city or a big regional town. But the problem is that they are transmitting that signal through a single-channel radio microwave link over about 800 kilometres—600 kilometres in some cases—to the nearest optic fibre cable, and then it is transmitted either to the Royal Flying Doctor Service base in Charleville or to a regional centre further east with a major medical practice. The signal that they send now is not high resolution because it is going through a radio signal. If they had optic-fibre cable connections in that far western part of my electorate they would be able to transfer a high-resolution image to the Royal Flying Doctor Service in Charleville, and they might refer it on to Brisbane for another opinion. But they are unable to send a high-resolution image now because, as I said, they are not connected to the optic-fibre cable main trunk route at all. They are connected by microwave link.

They said that if there is any doubt they call the Royal Flying Doctor Service, as you would imagine they would, so the doctor will be there and they will pick up that patient and they will evacuate them to Charleville to do an X-ray and then transmit it, if necessary, via optic-fibre cable to a capital city or regional centre if they are seeking a second opinion. It would be a high-resolution image. Every retrieval out of Birdsville costs $8,000. It may be that it is just a retrieval to take an X-ray to get a high-resolution image for a second opinion on a situation that they are dealing with. If that evacuation were not necessary—because they had that optic-fibre cable connection—they could deal with it on the spot and make a decision and it could well save having an $8,000 retrieval just to have an X-ray done and return the patient to Birdsville if all is clear. That is an example of the cost of providing a medical service in some remote communities and the problem here is they are not connected by optic-fibre cable to the main optic-fibre network across this nation.

The communities out in the far west of my electorate that come to my mind immediately—the Diamantina, Barcoo and Quilpie shires—have said that they would put money towards an optic-fibre cable to connect their towns to the main optic fibre line. They are prepared to put up $3 million or $4 million of their ratepayers' money towards that and what they require from this government, in a partnership arrangement which our policy would have allowed and does allow, is about $15 million to $20 million and then they would be connected to the main optic fibre line. That is a real partnership and that is the sort of investment that could happen under our policy, but we do not see it coming forward under this government's policy.

You might ask, Mr Deputy Speaker, how many evacuations would a town like Birdsville have? The week before I was there and they had three evacuations at $8,000 per evacuation. The day that I was there, leading up to the Birdsville Outback racing festival and the Birdsville races, there were over 6,000 people in town. The population of Birdsville and the Diamantina shire is about 300 people but about 30,000 tourists go through there every year. So we are not dealing with a population of 300; we can often be dealing with 4,000 or 5,000 people at any one time. I said to the Royal Flying Doctor Service clinic staff there, 'Do you get many people travelling through who need medical attention?' and was told, 'Every day.' It might be seniors and older people in their Winnebagos doing their big trip around Australia and needing prescription drugs, or maybe just a health check. What would be of great benefit to those communities is to have the back-up of an optic-fibre cable connection into the main line to support the decisions of the practitioner nurses and the clinic nurses that are there throughout the day and are available throughout the night.

The other concern I want to raise relates to those small communities of less than 500. As I understand it, they are now connected by clear-voice signal, a telephone, via copper wire. I understand it is the intention, should the shareholders of Telstra approve the arrangement, that the copper wire will be owned by NBN Co. NBN Co.'s role in those small communities is not to roll out optic-fibre cable, as we heard from the deputy chair today, but to provide a voice service to those communities by satellite. What a backward step! You have a viable copper wire system in some of those small communities and that is going to be trashed and replaced by satellite for a clear-voice signal. I have used a clear-voice signal via satellite and I can assure you there is always a latency in the voice and you almost have to say 'over and out'. Maybe satellite technology will improve over time, but I urge the government not to scrap the copper wire in those communities.

I also want to say something on the optic fibre cable rollout to the premises. I heard the deputy chair of the committee say that copper wire can be destroyed. Well, a lot of that copper wire has been out there for more than a hundred years and it still has life in it. I noticed that the member for Chifley said: 'Optic fibre cable won't be affected by floods; the only disconnect would be if it were cut.' If you have a power failure in your area and you are connected by optic fibre cable, you will be off the air unless you have power and are able to power up the signal that is coming via the optic fibre cable, because optic fibre—glass, in other words—does not carry current; copper does. That is why, when people are connected to the optic fibre cable only, they will need a battery backup for when the power goes down. They will need to have batteries and make sure that they remain fully charged. So this notion that optic fibre cable cannot be destroyed and will not go down is wrong. You get blackouts. And what happens in big floods when the power is cut? We have seen massive floods recently. If you lose your power under an optic-fibre-only connection to your home, you will not have a connection—unless you have a battery backup—because you are going to trash the copper wire.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

No, I am not.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

No, you are not; I respect you, Mr Deputy Speaker, and I respect your intervention.

The coalition has a very real plan not only to address these issues in remote Australia and build partnerships with third parties, such as the one I have described in western Queensland with the Diamantina and Barcoo shires, to roll out optic fibre cable—

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Member for Melbourne Ports: do you wish to raise a point of order or make an intervention?

Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Link to this | Hansard source

An intervention.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Will the honourable member speaking allow a question?

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Yes, I will.

Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Link to this | Hansard source

When the earthquake in Christchurch happened, and when there have been other natural disasters of that magnitude around the world, were copper wire and telephonic communications interrupted as well?

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

I cannot answer that directly in relation to Christchurch. But I have been to Openreach in London, which is British Telecom's division responsible for the rollout of broadband, if I can put it that way, in the UK, and they showed me that you clearly need a battery backup to power your system if you are connected only to optic fibre cable. So you need a separate power source on the premises to make sure that you remain connected, regardless of what might happen out in the community.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Member for Maranoa, for your contribution.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I have heard it all in this place—the National Party talking against the NBN; the National Party talking about the connection of their regions to modern high-speed telecommunications and broadband infrastructure, and the National Party talking against it! I might as well be sitting here listening to them bagging out farmers! I simply cannot believe that a National Party member who has a chance to connect his or her community to the modern world would say, 'This is a bad thing,' and spend most of their time bagging it out. It is beyond the pale.

I just want to ask a simple question: what type of committee was similarly brought together at any time under the Howard government?

Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Link to this | Hansard source

None.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

None, as the member for Melbourne Ports rightly indicates. Why? Because in the 19 times that they had the opportunity to fix this up, they were unable to do it and unable to provide any oversight whatsoever. We have here, in the nation's parliament, a joint committee of both senators and members—many of whom, I am proud to say, are serving the country well on this committee: my colleague the member for Greenway, who is here; the deputy chair, the member for Petrie; and, even though I have deep differences at a policy level with him, the member for Bradfield brings a lot to bear. But, having said that, that is where I have to depart because, even though they know well what is required to be done, they work their hardest to frustrate the need to do something that escaped them 19 times. The deputy chair, the member for Petrie, reflected very positively on the work of the member for Lyne, the chair of the committee, who tried to ensure both sides of the debate were accommodated through the work of the committee. But at some point something has to give when, effectively, we have Luddites on the other side. We have been open and accountable and have been met with nothing but frustration from a phalanx of technological Luddites on the other side who lack the vision and the ability to contribute to this debate. Remember that these are the people who keep arguing that we needed a cost-benefit analysis of the NBN. From the 19 times that they tried to get this right, clearly, they knew there was a need. They knew there was a benefit that would come from upgrading our network to ensure that everyone could get access to broadband. They tried it 19 times and now they are calling for a demonstration of benefit when they knew full well that it was there and needed to be done.

They called for a cost-benefit analysis, but they did not do that on their $10 billion water plan that the member for Wentworth advocated. They never did it on the Adelaide to Darwin railway, the plans that were put forward at the tail end of the Howard government. At no time did they provide a cost-benefit analysis, but they keep arguing about cost-benefit analysis in this place simply because it will frustrate the process of doing something that they failed to do.

People in the know have outlined the absolutely startling benefits of what this network will do. The member for Greenway pointed to the Deloitte Access Economics report—and I was very grateful that she did. That report talks about $27 billion of productivity benefit generated for business and government because it has improved the way they work by getting access to the internet. What was the opposition's response? Via the member for Wentworth, the opposition's response was to bag out Google and to criticise Deloittes for putting forward this economic work. It is simply astounding. Any time any person seeks to put forward a different view to those opposite, they will not respect those views and they go out of their way to challenge them.

They also challenge the need for fibre to the premises and say, for example, there has been no backing for it. I actually recall significant backing for it from the ACCC. The ACCC said that having fibre to the premises was our chance to finally rid ourselves of the competition devils that had held us back in the sector—a sector dominated by one major player that continued to crowd out any ability for new players to come in, for new innovation and for someone else to take up the communication challenges facing the country. And the opposition say, 'Why did we move from our initial plan to the end plan of where we are at? Why did we move from the $5 billion plan to $43 billion plan? They know full well, and the member for Bradfield knows full well, that the reason for that was that the major dominant player in this country submitted six pages for a $5 billion tender for the major upgrade our telecommunications network. Those six pages clearly demonstrated that the major player in this country under the former leadership of Sol Trujillo and Don McGauchie at Telstra were not serious about this and would do whatever they could to frustrate it. We had an ossified industry dominated by one player. We wanted to smash through a calcified telco sector. What did we get? We got the opposition criticising us for something that had, frankly, bedevilled them. They knew the frustrations. You only need to spend five minutes with former senator Helen Coonan to know how much frustration she had as the former minister trying to get Telstra to play ball. Telstra were refusing to invest because the ACCC would not give them a green light to rip off consumers, again under the former leadership of Sol Trujillo, and it was something that the former government was not prepared to countenance either. We know they had problems. We wanted to smash through those problems. You would think they would want to join with us. They do not. They spend their time bagging it out. We had to step up.

They continue to frustrate every step of the way on this committee and are still managing to run the same old tired arguments that we know will not work. The member for Greenway knows it. I understand the member for Bradfield—as I have reflected on earlier, I have regard for his industry expertise and regulatory expertise—has been told he has to run a line which he knows, in his heart of hearts, is not the right one to run. We have a debate: fibre versus copper, with its limitations in capacity; copper, with its limitations because of its fault rate. As reflected on by the member for Petrie, the minute you get moisture in it, faults go through the roof. We know we have a chance. We can either keep rolling out copper with its limitations or we can say: 'Righto. We know this is an old technology. We're going to go to the one that actually works and that's optic fibre.'

The other thing is, too, they know what is better in a head-to-head contest. They know that fibre is the way to go but what is their option? They talk about HFC. Nothing better demonstrates that the shadow minister for communications simply has no idea when he keeps advocating HFC, when he talks about Sydney and Melbourne and 30 per cent of homes having HFC. Everyone knows that HFC chokes up. Once you have Foxtel, subscription TV, running through your home and you are trying to rely upon that plus another signal for internet access, you are going to become choked up.

At the same time they argue for wireless. Everyone knows that when more people are on wireless at one particular time wireless cannot deliver, that it slows right down. So they say to us 'HFC', they say to us 'wireless' and then they say, 'We don't even need to go down this path. Why don't we just do a black spots program,' and then condemn the rest of the country to inconsistent speeds. We are talking about a uniform network with massive download speeds and fantastic uploads. That is the big thing: the fact that there are greater upload speeds in this network. We say, 'Regardless of where you live, we want, in 93 per cent of cases, to have you connected to the network of the future,' and they say, 'No, we want you to have a patchwork network that won't deliver.' I recall editorials from the Illawarra Mercury asking Mr Turnbull, the shadow minister, why he was condemning the regions to a second-rate option. I said earlier in a head-to-head contest people know—wireless versus optic. I might reflect rightly on the words of the member for Greenway who said, 'It isn't a case of competition; it is about being complementary, that wireless and fibre have a place together in this network.' Head to head fibre versus wireless—we know who wins. Why? The answer was delivered to us by the member for Sturt when he chaired a committee which clearly said, 'Hands down, fibre wins.' They know it. The member for Bradfield, with his expertise, knows it. The people in the know, the people I joined on this committee, the member for Greenway—they know it but the opposition still argue that we have to be down this path.

Frankly, I think we are expecting too much of the opposition. The member for Cowper says, 'The NBN cannot tell us numbers.' I think we are expecting too much from a bloke who should know that the NBN is a wholesale network and it does not necessarily keep the retail numbers because the RSPs do. The RSPs have to go through a process of activation of individual clients. It is not the wholesaler's job to keep the retail numbers; it is the RSP's job. It is the RSP's process to go through the activation mechanism. It is their job to do it. But the member for Cowper is not interested in that, just as he was not interested when the member for Kingston told us that in the past week, when they activated the network in Willunga, 90 per cent of the people there opted in. When I went to Victor Harbour with another committee I have the honour of sitting on, we learnt that they cannot wait for the NBN to come to their neck of the woods. They say they want to hold onto their best and brightest in regional South Australia instead of seeing them denied the opportunities for jobs and education, leaving there and going to Adelaide. You should be looking to hold onto the best and brightest in your part of the world instead of seeing them travelling from the regions into capital cities.

The thing that gets me the most in this debate is this elitist argument that comes out of the opposition when they sneer and look down their noses, saying, 'We all know what you want to use the internet for: you want to use it to download IP TV, and we shouldn't be spending money on that.' They seek to degrade the purpose of the NBN. As the member for Greenway rightly said, they only see it as the internet; they cannot see it as a broader application of this network. They sneer down from positions where their constituents have access to a great network. In constituencies that I am representing—for example, Woodcroft—the network is jammed and people have to leave that suburb for somewhere else to get a connection. Wireless does not even work. We are trying to do something for the people of Western Sydney and the people of regional Australia, and they, from their positions with constituents who do not have these problems, say to us, 'The best you should get is a second-rate option,' and 'Stop always hoping for the Bentley when the best you can get is a Commodore.' That is the line they use.

Their words are an insight into their thinking. It is that the best you should hope for is the second-best option. 'You do not deserve a network that we already enjoying.' That is what they are saying to me. That is what they are saying to the member for Fowler. That is what they are saying to the member for Greenway. It is what they are saying to members opposite who have to toe an insane party line. When they talk about this report in this place, remember this: they cannot be trusted. People in the general community know they cannot be trusted on this issue, because their sole job is to destroy this network and to deny opportunity to the people of Western Sydney. They talk with a forked tongue and a dead policy head.

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

I am very pleased to follow the member for Chifley in this debate concerning the recent report provided by the Joint Select Committee on the National Broadband Network. I have a number of comments to make about the report, but before I do that I feel I should address a number of the comments made by the member for Chifley, who informed the House that I had been told to run a line on the National Broadband Network and in my heart it is not what I believe. This is a fairly rich claim in the week when Labor have introduced legislation to introduce offshore processing after years of telling us it was not what they believed in.

The question of what is in my heart, I feel, I am best placed to inform the House about. What is in my heart is very much the same as what is in the heart of the member for Wentworth and of the coalition generally when it comes to the question of broadband. We are firmly in favour of upgrading Australia's broadband infrastructure. We are in favour of doing that in a rational and cost-effective way in which the private sector takes the maximum degree of load and where government spending concentrates on areas of market failure. By contrast, the member for Chifley has sought to portray this issue as some kind of class struggle and argue that in the coalition we are asserting that areas represented by him and others in this place which have inadequate services should remain and suffer those inadequate services while we, it would seem in his view of the world, swan around in Rolls Royces, eating caviar and enjoying the high-speed broadband which festoons our seats.

I venture to suggest that that picture is a simplistic one, but I do make the substantive point: there are areas of this country that have deeply inadequate broadband. That is not in question at all. There are many areas, including outer suburban areas, where Telstra has put in pair gains systems for what were good operational reasons at the time and people in those areas simply cannot get DSL today. There are plenty of areas where people do not get adequate broadband—that is not in question for a second—but it is one reason why we have argued that it makes sense to closely analyse the strategy underlying the National Broadband Network, announced in such haste in April 2009, under which a gold-plated, Rolls Royce fibre-to-the-premises network would be built to 10 million premises.

That raises the question, amongst many others: is it the most sensible and cost-effective strategy to address the areas of need and to get Australia's overall broadband infrastructure to a level which provides the social and economic benefits that we seek but which is also as cost effective as possible? These are serious questions. That is why the coalition have consistently called for a cost-benefit analysis, because it is a respected and well-understood methodology for dealing with the questions of how much money ought to be spent on particular projects, what the design of those projects should be and, in turn, what the benefits are that are obtained as a result and therefore does it make sense to proceed with the project and allocate scarce government funds to it, in a world where, as we all know, there are many more claims on the government purse than can all be met?

The coalition have repeatedly pointed out that the process which led up to the announcement in April 2009 gravely failed to meet the standards set by this government for itself. It failed to meet the standards set by Infrastructure Australia and it failed to comply with the principle articulated by the Rudd-Gillard government that major infrastructure projects should be preceded by a cost-benefit analysis. One consequence of the strategy that has been adopted is that, in many areas where there is inadequate broadband today, Australians in those areas could well be waiting up to nine or 10 years before they get a new service because of the strategy which has been adopted, which is to build a brand-new network from scratch.

In the balance of the time available to me here today I want to turn to the substantive question of the report produced by the Joint Committee on the National Broadband Network, Rollout of the National Broadband Network: first report. Let me start by reminding the House that the purpose of the joint committee is to engage in parliamentary oversight of the work being undertaken by the National Broadband Network Co. executing on the policy mandated by this government.

We on this side of the House do not think the policy is a good one. But there is a second and quite distinct perspective that we bring to this issue, which is a concern to ensure that to the extent the policy is being pursued we want to understand how it is being pursued, the operations of NBN Co., the strategy it is following and its performance against the objectives which have been set for it. More importantly, that is what the parliament wants the committee to be doing. That is why the parliament has established this joint committee so that NBN Co. can be subject to proper scrutiny, bearing in mind, as we are repeatedly told, that this is the largest infrastructure project in Australia's history and that, notwithstanding the various assertions and promises that were made at various stages of the long and convoluted broadband policy debate, all of the money that is being spent on this massively expensive project is coming from taxpayers. Not one cent is coming from the private sector, despite the fact that Labor took a policy to the 2007 election, which involved a joint venture between government and the private sector, with private sector paying at least 50 per cent and despite the fact that when the April 2009 announcement was made to move to a fibre-to-the-premises policy we were told that there would be private sector investment from the start. None of that has happened and the substantive reason is that the advice the government received from McKinsey and KPMG when they produced the implementation report, at a cost of $25 million, could be paraphrased as follows. The private sector would not touch this with a barge pole. This is a very bad investment. That is not of itself, I would readily agree, the same question as whether it would pass a cost-benefit analysis. It is certainly true that when you do a cost-benefit analysis you take account of benefits which may not be captured by the company that builds the network. But it certainly raises the very obvious question: if the private sector thinks this is such a disastrously bad investment, why on earth are we not at least going through the exercise of weighing up, of quantifying, those benefits and assessing them compared to the costs?

Let me therefore come back to the question of whether the committee is working effectively as an oversight mechanism of this enormously expensive project. I have to report, with regret, that the committee is not working very effectively. We have had an unsatisfactory and an uncooperative attitude from the National Broadband Network company and from the government. We saw that at the committee's hearing on Tuesday night. The committee had asked, through its chairman, that regular key performance indicators be provided. A jointly signed letter was sent to the chairman by the Minister for Finance and Deregulation and the Minister for Broadband, Communications and the Digital Economy noting that these key performance indicators would not be available until mid-September.

The committee therefore advised the government that a meeting would be scheduled for 20 September to allow time for the key performance indicators to be provided to the committee and to allow the committee to ask questions of NBN Co.'s management against the backdrop of these key performance indicators. When we assembled for the committee meeting on Tuesday night, we were told that the key performance indicators were not available. We further learned that they had been provided to the Department of Broadband, Communications and the Digital Economy on 19 August—more than one month before the date of the committee's hearing—but the department, presumably following a direction from the minister or his office, had declined to provide them to the committee. There is no other word for it; this is a farcical state of affairs when it comes to a committee which is supposed to be overseeing the operation of the National Broadband Network company.

I make a point based upon my own experience on the senior leadership team of a major telecommunications company. In my years on the senior leadership team of Optus, every week there was a weekly trading meeting attended by the chief executive, the heads of major business units and the heads of key corporate functions, including me. Each business unit provided a written report on key metrics—actual, forecast and budget; metrics, such as sales performance by week and cumulatively; new connections and new cancellations; churn; average revenue per user; acquisition costs; and customer service metrics such as call answer rates and abandonment rates. This data also went to the board on a monthly basis. These are the basics of running a telecommunications company.

I have no doubt that Mr Quigley has such data when it comes to the National Broadband Network company, or at least an analogous version of the data, having regard to the fact that NBN is a wholesale and not a retail operator. It would be a very straightforward exercise to provide a report on key performance indicators to the committee and it is deeply disappointing that the government has failed to facilitate the provision of that information. It is unclear where the responsibility lies between the government and NBN Co., but it is just an extraordinary proposition that, with several months notice, this information was not provided.

Let me note, secondly, a failure in this report to engage with any of the competition issues which arise when it comes to the National Broadband Network. The member for Chifley spoke about the fact that Telstra was subject to price regulation by the ACCC to prevent it from using its market power to gouge customers. The NBN Co. is similarly to be subject to such regulation. It is required to lodge a special access undertaking with the ACCC to obtain approval for the wholesale prices it is going to charge. In the documents lodged by the NBN Co. with the ACCC it has proposed that, for services other than the entry-level service, it will be allowed to increase its prices by CPI plus five per cent each year for a period of more than 20 years. When you do the maths and work out the compound rate of growth that represents, if you plug in an inflation rate of two per cent or three per cent, you get to an enormous multiple. An enormous price increase is permitted. This is a very important issue.

One of the challenges with this market structure is that we are establishing a new monopoly. The government is taking active steps to shut down services on other networks, such as the Telstra network and the Optus network, and indeed the government has legislated to prevent other companies building new networks and being permitted to operate high-speed services over those networks. This is, frankly, an extraordinary way in which to deal with the issue of telecommunications competition. Two very well respected international economists—Joshua Gans and Jerry Hausman, the latter a professor at MIT, Massachusetts Institute of Technology—have made a submission to the ACCC in relation to these matters and have very strongly criticised the policy model which is being pursued by this government as dangerous to competition. It is troubling indeed that the report which has been provided is silent on this point.

The third point I wish to raise very briefly is that there is a very confusing discussion about private equity in paragraph 2.101 of the report. I think this means equity to be obtained from the private sector. The committee is in no position to make any progress in investigating this, because the National Broadband Network Companies Act, section 45, explicitly says that only the Commonwealth may hold shares in NBN Co. and all of the paid-up share capital must be held by the Commonwealth. There is no scope for private equity and it is somewhat mystifying why the committee thinks that this matter is worth pursuing. This is a report which is a testament to a poor policy, an anticompetitive policy and a policy which is not exposed to the degree of scrutiny the government says it is committed to. (Time expired)

Debate adjourned.