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

On behalf of the Joint Standing Committee on the National Broadband Network I present the committee’s report entitled Review of the rollout of the National Broadband Networksecond report, together with the minutes of proceedings.

In accordance with standing order 39(f) the report was made a parliamentary paper.

by leave—This is the second report to examine the detailed performance measures provided by NBN Co. and government. It allows direct comparisons to be made between the foundation documents of NBN Co.'s corporate plan 2011-13 and shareholder ministers' letter to NBN Co. of 17 December 2011.

The committee noted the financial result of a lower than expected capital expenditure and higher than expected operating expenditure than set out in the NBN Co. corporate plan. These figures could be an early warning that it is costing NBN Co. more to do less than was forecast in the corporate plan.

The committee, however, has accepted that there are reasons for the differences, but it will watch these figures closely. Value for money for taxpayers is the critical key performance indicator in turning this good concept into an even better reality.

Because there are unresolved issues between various stakeholders and the Australian Competition and Consumer Commission, the NBN rollout time frame set out in NBN Co.'s corporate plan has slightly slipped. Providing certainty for markets, investors and consumers demands greater attention from government to resolve outstanding regulatory issues so that no further slippages occur.

If these outstanding matters can be addressed quickly, 2012 does have the potential to be the year of the NBN. The move from test sites to broader rollout will engage more people, and see more retail engagement and more innovative strategies and products introduced into Australia.

Regional and remote Australia will then finally have the opportunity, through the next steps of satellite, wireless and fibre-to-the-premises, to be better engaged in the economy and services.

The committee's last recommendation called for better engagement with the NBN for low-income households and other disadvantaged groups, so that these opportunities can turn into real, ongoing and substantial change for the better in rural and remote communities.

Before making some general comments, I would like to summarise our other recommendations. The first of these asks the Department of Broadband, Communications and the Digital Economy to revise the presentation of its six-monthly reports on KPIs to enable information to be compared across years.

Recommendation 2 requests the department to review its clearance processes to ensure that answers to questions on notice asked by the 57 committee members are provided on the due date.

Two recommendations deal with a subject close to my heart, the rollout of the NBN in regional and remote Australia. Recommendation 3 urges NBN Co. to publicise as a matter of urgency its policy and costings for extensions to its planned rollout of fibre, so that isolated communities are aware of how much NBN Co. would charge them.

Recommendation 4 emphasises the importance of NBN Co.'s consultation about the rollout of the NBN. During its hearing in Broken Hill in July, the committee heard from several witnesses from that region about the lack of information from NBN Co. about the NBN generally and about likely connection dates.

While we are aware that the NBN is at an early stage of rollout, it should be clear that four of our five recommendations seek to improve the flow of information from NBN Co. and the department.

This focus arose from two concerns.

Firstly, while regional and remote Australia particularly needs reliable and fast broadband, communities all over the country have until recently had no idea when they might be connected to the NBN. While NBN Co. has a public education program, it was only with the release of its 12-month national rollout plan, on 18 October, that many communities had definite information on when they might be connected to the NBN.

The committee notes that NBN Co. plans to release its three-year indicative rollout 'early next year'. Annual updates, combined with education and consultation programs, may provide communities with greater certainty about likely connection dates.

Secondly, some of the delays in receiving material from the department have been unacceptable. The committee was concerned that, if these persisted, delays in the receipt of material on KPIs would continue to hamper its work of reviewing the rollout of the NBN.

While this report was being cleared through the committee, we became aware of a major change to the term of the interim agreement that retail service providers have to sign with NBN Co. Neither the department nor NBN Co. saw fit to advise us of this significant matter, as just one example of the process at the moment that the committee is concerned about.

I would like to thank all committee members, all 57 of them as I mentioned before, for continuing to focus on Australia's need for speed in the development of information communication technology over and above all other policy or political considerations, and what is one of the hotly contested issues in this place.

I would also thank the secretariat, who are here today, again for their work on what is a challenging public policy oversight role. As it is the appropriate time of year at present, I say Merry Christmas to all in the secretariat and thank you for your ongoing work.

I commend the report to the House.

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

by leave—I rise to make a brief statement on the second report of the Joint Committee on the National Broadband Network on the rollout of the NBN. As the deputy chair of this committee, I would like to associate myself with the words of the chair, the member for Lyne, in tabling this report. This is the first report to deal more comprehensively with what has occurred to date in relation to the NBN rollout. The first report released by the committee was really a brief overview, while we awaited the first report of NBN Co.. This second report considers the NBN Co.'s report. Importantly, it notes that many of the rollout's milestones and targets have been met. In many areas there have been delays, as the chair has mentioned, and there are issues about competition and providers. We will continue to work through those issues in future reviews and reports.

Certainly, 2012 is going to be an important year for the NBN Co. rollout. We have welcomed the 12-month plan released by NBN Co., which is outlined in the second report. Importantly NBN Co. has advised the committee that early in the new year it will be releasing its three-year plan, which is eagerly awaited by the committee and the broader community. Everyone is very interested in knowing what the plan is for that rollout—which suburbs and households will get the benefit over the next three years of the NBN coming to their town. In this area people are not asking why we are doing it, but how quickly can we get it. That is why this three-year plan is so important.

The decisions of the ACCC are going to be very important in 2012. We are waiting on a number of those decisions—matters that are currently under consideration which will impact on the future of the NBN Co. rollout. I suspect that will be the subject of the committee's third report, which is due in June 2012. There are positive signs already as witnesses in the second report say that, due to structural separation, there are new providers coming in to providing greater competition. We hope to see more of that and it is something that is positive for the broader community.

Like the chair, I would also like to thank the secretariat and all members of the committee for all of their work this year. As deputy chair, I would also like to thank the chair of the committee for all of his work in trying to manage all the committee members. It is an interesting committee and a very important one. The NBN Co. rollout has major implications and benefits, not just for households but also for businesses, for education, for health. That is why this inquiry and these reports are going to be very important over the coming years as the NBN rolls out. I look forward to continuing my work with the committee. Once again, I thank all of those who have been involved, not just in the development of the second report but also in the ongoing work of the committee.

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

by leave—I join the chairman, the member for Lyne, and the deputy chairman, the member for Petrie, of the Joint Committee on the National Broadband Network in thanking the secretariat and wishing them and the 57 members of the committee–as the chairman reminded us we have—all of them a very Merry Christmas and a break from surveying the NBN for at least a few weeks over the holiday period.

However, I must observe that the quality of the reporting and accountability of the NBN Co. remains inadequate. This has been the subject of some criticism and commentary in the report. There are fundamental questions associated with the rollout of the NBN that the NBN Co. has declined to respond to in any meaningful or cogent way. The NBN is so expensive because of the decision taken by the government to build this new telecommunications network, this new broadband network, by connecting households directly with fibre. It is well understood that the vast bulk of the cost of any new telecommunications rollout is the civil works and, obviously, the more of that civil work component there is, the more expensive it is. That is why in most markets around the world—almost all markets, in fact—telcos and governments are using a variety of technologies to get the most cost effective upgrade of broadband services that they can.

The committee has sought to get some coherent, detailed answers from the NBN Co. as to why it is not considering other technological approaches, in particular the approach of fibre to the node, which, as the House has heard me say before, in the UK will nonetheless deliver 80 megabytes per second speeds for the cost of a third or less of fibre to the home. That speed is way in excess of the speeds demanded or needed by households at the present time or for the foreseeable future. This is a fundamental question. The NBN Co.'s response has been simply to say: 'The government has told us to do fibre to the home and that's that.' Having said that and particularly in the constrained-capital circumstances of today with so many financial risks abounding, any company would and should be constantly reviewing the way in which it is seeking to achieve its objectives with a view to determining whether there are more cost effective approaches. One of the other issues associated with this that the report touches on but only briefly is the use of the hybrid fibre coax networks. Telstra's and Optus's hybrid fibre coax networks, which were built originally to deliver pay television and still do so in the case of Telstra's, pass about 30 per cent of Australian households. The Telstra network in Melbourne is currently running at 100 megabits per second and it is offering that very high-speed service. For a relatively modest additional cost, Telstra is going to upgrade its HFC network in other cities to 100 megabits per second. That is hardly surprising; everywhere in the world pay TV cable networks are used for the delivery of broadband services and, even where there is fibre-to-the-home cable, HFC cable is a very important competitor and a provider of facilities based competition.

Every other market encourages the cable to provide competition. Even in markets where fibre-to-the-home networks have been built, governments encourage the HFC owners to provide continuing facilities based competition. Not so in Australia; as we have seen with the Telstra agreement and the legislation supporting it, the NBN Co. will be a fixed line monopoly, and the government has spent billions of dollars to pay Telstra and Optus not to use their HFC network to provide broadband and voice services once the NBN is rolled out. This is not only an extraordinary act in terms of anti-competitive conduct and really quite at odds with policy everywhere else in the world where governments seek to promote that type of facilities based competition, but also extraordinarily wasteful.

I will conclude on the issue of waste. We should consider that 30 per cent of Australian households will very shortly be able to access 100 megabits per second broadband via the HFC networks that have already been built and paid for. In Melbourne and in other cities that is already available through Optus and Telstra. That HFC network, at the expense of billions of dollars of taxpayers money, is to be rendered obsolete and effectively decommissioned so as not to provide broadband services in order to enable the NBN Co., spending yet more billions of dollars of taxpayers money, to build a fibre-to-the-home network which will provide, so it is promised, 100 megabits per second. In other words, billions of dollars will be spent so that households will have access to bandwidth at a speed which is exactly the same as they can get today from the HFC. That really sums up the wastefulness of this project.

The challenge that the committee faces is getting genuine accountability from the NBN Co. So far in the public hearings we have only heard from the Chief Executive, Mr Quigley, and I have to say getting information from the NBN Co. has been like drawing teeth. The NBN Co. has to do better than that. If it were a publicly listed company it would be much more transparent and much more accountable. The great irony of all of this is that because the taxpayers of Australia own this company, it is reluctantly accountable and accountable to a much lesser degree than if it were owned by a bunch of pension funds or foreign pension funds and listed on the Australian Stock Exchange. Our resolution as a committee for the new year should be to try to get the same level of transparency and accountability from the NBN Co. as a publicly listed company does—as, for example, Telstra provides. In doing so we should hope—and this may be a triumph of hope over experience, but it is the festive season, the season of hope—that the government would support us in that endeavour.

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

by leave—I take this opportunity to make a few remarks in relation to the report of the National Broadband Network committee because the committee has the very important function of informing the parliament of the progress of the project. I think the report fails insofar as it does not address the key issues of time, cost and revenue—the three keys to this project—in a meaningful way so that the Australian people can draw meaningful conclusions as to how the project is going in relation to the original corporate plan and in relation to its budget.

It is vitally important that the ultimate format of the report reflect this progress. As a committee of the parliament, we have a responsibility to advise taxpayers and the parliament on where the project sits in relation to its progress. My concern is that in a number of key areas the report is deficient. It provides a great deal of information, most of which is already publicly available, and it aggregates that information in a useful format as far as it goes. But there are a couple of key points which are missing. The first point is in relation to the cost of the project and the risk to which the taxpayer is exposed.

We saw the abandonment of the initial tendering process for major contracts back on 1 April this year. The NBN Co. had gone out to the market, had received prices from 14 tenderers within the industry but was unable to get a tender which met its budget expectations. That tender process was abandoned and subsequently a deal was concluded with Silcar. NBN Co. advised the deal was within the budget parameters. The committee and the parliament do not know how that was achieved. We do not know what 'within budget' strictly means. We all take a literal interpretation of what 'within budget' means, but we do not know the sorts of risks that the Australian taxpayer has been exposed to in order to meet that within the budget classification.

We may have substantial risk in relation to extension of time. We may have substantial risk in relation to industrial disputation or escalation of labour rates. We may have substantial risk in relation to the increased cost of materials. We just do not know. I think it is incumbent on NBN Co. and on the government to allow the sort of reporting which would enable the committee to do its job and to report back to the parliament on that very important issue.

On the issue of time—a vitally important issue—the report fails to be provided by NBN Co. with accurate programming information so that the parliament and the Australian people can monitor the progress of the project against the projections that NBN Co. makes, and so that the parliament and the people of Australia can be aware of any potential risks in relation to time blow-outs on the project, which ultimately manifest themselves in cost blow-outs. We do not have that sort of detailed programming information across each of the sites or across each of the individual projects within the project itself; we just do not have that detail. We have some general narrative as to which projects are progressing or which projects have been commenced, but we do not have a detailed programming document that allows the reader to sit down and say, 'Well, the work in Kiama is three weeks ahead of schedule,' or 'The work in Armidale has been completed on time,' or whatever the case may be. The reader of this report cannot determine the status of the project in relation to time.

The third point I would like to touch on is the issue of take-up rates. The report is grossly inadequate in relation to the take-up of the project. Senator Conroy has been out in the media arguing that, because only two per cent of the people in Armidale have sought to take up the NBN within a particular area, that is irrelevant with regard to the fact that ultimately there will be a switchover and ultimately those people will be forced onto the NBN—so what is the worry?

The worry is that the current take-up rates are a very good test marketing exercise and a very good indication of the likely demand for upmarket packages. If people are not rushing to get the basic package of 12 megabits per second, it stands to reason that there is not going to be a great deal of demand for packages beyond 12 megabits per second, and therefore the additional revenues necessary to underpin the project will not be received.

I think that these are three very important points that need to be addressed in ongoing reports. I certainly hope that will be the case. I certainly hope that the NBN Co. will be far more transparent in its dealings with the committee into the future and I look forward to improved information being provided to the parliament in future reports.

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

I move:

That the House take note of the report.

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

The debate is adjourned.