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

I want to draw honourable members' attention to the dissenting report by the coalition members and senators which sets out some very disturbing facts about the disastrous state of this project. The debate over the NBN, of course, has been contentious, but the rollout has been proceeding for long enough now for there to be some objective facts on the ground and, indeed, in the ground.

The first point that the coalition have made is that the fibre rollout is well behind schedule. The original NBN Co. corporate plan published at the end of 2010 forecast that fibre would be available and connected to 950,000 brownfield and 319,000 greenfield premises by June 2013. As at the end of May the fibre network had passed 71,000 brownfield and 32,000 greenfield premises. That is a catastrophic shortfall. It is not just a question of falling short of the 2010 forecasts. By brownfield, of course, honourable members understand I am talking about the already built-up areas as opposed to new developments. I mentioned that the first forecast was 950,000 to be passed by end June 2013. In August last year their new corporate plan slashed that down to 286,000, then in March 2013, just a few months ago, that target was again reduced to between 155,000 and 175,000, and as of mid-May the fibre network had passed only 71,000 brownfield premises. This is one shortfall after another.

There have been cascading forecasts, the target is dropping down, and it says something about the management of this business and their capacity to forecast. They set a new target in August last year, they then had to dramatically reduce it in March this year, and now it appears they are going to fall short of a target that was set 90 days prior to the target date. There are no forecasts in the corporate plan that one can take seriously.

This slowness of the rollout is a very significant issue. Honourable members will understand that one of the arguments in favour of the National Broadband Network has always been that having everyone in Australia connected to very fast broadband will deliver economy-wide benefits, big spillover effects, externalities. We do not doubt that those benefits are there to have ubiquitous connection to very fast broadband. The big question is: what is the incremental benefit, if any, between having people connected to very fast broadband at the speeds it can be achieved under the approach we favour—in most built-up areas, fibre-to-the-node—and having fibre-to-the-premises? The one thing that is clear—and there is no argument in any of the literature or in experience—is that having everyone connected to very fast broadband, even at speeds much slower than the peak speeds available on fibre, is a real benefit. The problem that we face, therefore, with the NBN's slow rollout is that we are not getting the benefits of ubiquitous connectivity any time soon, and perhaps we might not be getting them for 20 years or so. At the current rate of progress the completion of this network will take many decades.

In our re-examination of the NBN's financial model, in our alternative policy, we assumed that it would take another four years to complete. That is a very optimistic assumption. At the moment the NBN is passing less than a quarter of the number of premises it should be passing, even according to its revised corporate plan. For a project that is passing around 350 premises a day, as it is at the moment, to seriously imagine that in 18 months or so it is going to be passing well over 6,000 a day is just incredible.

The reality is that this project is going to be long delayed. That means that the benefits of universal or ubiquitous connectivity will also be long delayed. It is cold comfort to say to somebody—and there are at least two million premises in Australia in this category that have, effectively, no broadband at all since they do not have broadband at a speed that would enable them to watch a YouTube video—'Don't worry, you are going to get the Rolls Royce option, the fibre-to-the-premises option, in 10 years or 20 years time.' That may well be beyond the lifetimes of some of the occupants of these premises, and it is certainly beyond the time their children will be at school.

The issue really boils down to a fundamental one of management. There is an argument about technology, but even if you accept Labor's argument about technology the fact is that the project is just not getting there. One of the problems that we are seeing is that the civil contractors who have been employed—Silcar, Transfield, Syntheo and Visionstream—have not been delivering the premises that they have been contracted to deliver. It is common knowledge in the industry that they are all losing a huge amount of money. The word on the street, as it were, is that these contractors will need to have contract prices increased by something in the order of 30 per cent of the current contracted rates if they are able to make any money or any margin at all.

That being the case, what does that tell us about the reliability of the NBN Co.'s cost forecasts? It has a corporate plan that its management tells us is based on the current contracted costs, yet we know that the contractors are going backwards financially. This has had some pretty dramatic results: the Silcar CEO Peter Lamell left the company in May; the Service Stream managing director, Graeme Sumner, left the company in April; and the Syntheo joint venture appears to be about to be dissolved.

The failure to have satisfactory commercial relationships with the civil contractors is a profound failure of the NBN Co., because it does not have a huge civil workforce of its own and is not proposing to have a huge workforce of its own, although it has sought to take over the management of the construction in the Northern Territory. But it needs to have a satisfactory relationship with its civil contractors and it needs to have contracts with them that enable them to pay their subbies a fair price and make a margin for themselves. If they cannot do that, it simply will not continue. We have set them out in some detail in this dissenting report.

I spoke earlier about the asbestos issue. I will not go over all of that ground again. But the coalition are very concerned that the Commonwealth will be liable for asbestos risk, notwithstanding that it is in Telstra pits that are being remediated by contractors working for Telstra. As you know, the Work Health and Safety Act imposes on NBN Co. a duty to workers, including workers employed by—for example—Telstra or contractors to Telstra if their work is influenced or directed by NBN Co. It is very arguable, it seems to us, that NBN Co. is in that position of influence and therefore could have liability for this asbestos risk.

We are particularly concerned that the issue of asbestos has been well-known for a long time and this does not reflect well on either Telstra or NBN Co. There has clearly been a failure of supervision on the part of both companies. I simply note and draw the attention of honourable members to the comments that we have made there.

I want to now turn to the question of the fixed wireless rollout, which has not had enough public debate or discussion because the fibre-to-the-premise rollout is so much bigger. Fixed wireless is the technology solution for about four per cent of the country. Under the plan, 93 per cent gets fibre-to-the-premise, four per cent gets fixed wireless and three per cent gets satellite. I might say that under the approach that we would sake many of those premises or households in the fixed wireless footprint at present will get wire line, fixed line, very fast broadband. They are in towns that have less than 1,000 premises, which will not get fibre-to-the-premise under Labor's approach but which will be eminently suitable for a vectored VDSL fibre-to-the-node solution of the kind that we are proposing. There are many smaller communities in rural and regional Australia that will get much faster and much more convenient broadband services under our approach than they will under Labor's approach.

Looking at the way the NBN Co. is tracking at the moment, it has been reported that even on their best case scenario their fixed wireless network will cover only 31,291 premises by the end of June, which is only 45 per cent of the 70,000 target. The explanations for this shortfall given by the NBN Co. management frankly beggar belief. Their explanation is—and this has been given by the minister as well—that there has been an unanticipated level of tall trees in rural and regional Australia. I will quote the evidence from the NBN chief technology officer, Gary McLaren, in estimates of 30 May in which he talked about these trees. He said:

We have always expected there will be some areas, mainly due to vegetation—trees and the like—that will cause those installations to not be able to pass through that qualification step …We are seeing those being slightly higher than we would have originally expected.

Being ambushed—bushwhacked—by the presence of tall trees in regional Australia is a fairly pathetic excuse. But it does underline the poor planning and the poor management of this project.

Finally, I want to touch on the very, very troubling issues about management. We have at the moment a new chairman, Siobhan McKenna. She has been on the NBN board from the outset but she became chairman on 21 March, replacing Harrison Young. She has said publicly that she is taking a much tougher approach to management. She has said that she does not want Senator Conroy, the minister, being able to communicate directly with NBN Co. Chief Executive Mike Quigley, although Senator Conroy seems to have said that he will not play along with that.

More troublingly, it is being widely reported—and has not been anywhere denied—that Siobhan McKenna has, on behalf of the board, sought the dismissal of the Chief Executive, Mr Quigley, and that she has no confidence in him. If this were a publicly listed company, belonging to a bunch of superannuation funds and private investors, and there was published in the newspaper a report saying that the chairman had no confidence in the chief executive and wanted the chief executive sacked, that matter would have to be resolved within hours. And, yet, we have at the moment with this company, the biggest infrastructure project in our history, a situation where the management is tearing itself to pieces, the board is opposed to the chief executive—it sounds like the Labor Party caucus, frankly—and there is no denial, clarification or confirmation. When Mr Quigley was sought to be questioned about this in estimates, as we have set out in this dissenting report, Senator Conroy prevented him from answering any questions. This project, sadly, is in utter chaos. This dissenting report, which I commend to honourable members, sets out in some detail the sorry tale of mismanagement that the NBN project is today. (Time expired)

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

It is a great pleasure of mine to be able to speak to this report—the fifth and final report of the joint committee. It is a project that has had a great degree of oversight in the rollout and in the management of the project itself. In fact, I have from time to time been concerned that we have overlaid too much oversight. I am certainly one for, obviously, the parliamentary ability to probe and test the way in which government business enterprises like this operate. But, when you consider all of the ways in which this project has people looking at it, you would not have a similar level of investigation imposed on an organisation external to government.

Having said that, NBN Co. has always sought—from my impression, and I am sure it would be the impression of others, particularly on the government side—to cooperate with questions and to be available to answer inquiries from members of parliament. Be it in estimates, the joint committee or the public hearings, they have tried to do the right thing, to talk about a project that is going to transform this nation. There is no doubt that this will economically transform the way that we operate, and it will put us at an advantage compared to other countries that have not been able to do this to the same breadth and the same level of detail that has been undertaken in this project.

It is an investment of just over $30 billion in a technology that is already, through the internet—if you take on board the Deloitte study—contributing about $50 billion in economic value to this country currently, and will contribute $70 billion into the future. It has already been indicated that that investment will have a return of seven per cent, but, to be honest, I see that the actual return itself will come when you look at the way that it will change the manner in which the economy operates, the way in which firms operate, the way in which communities connect and interrelate, the way that education is delivered in this country, and the way that health care is delivered in this country. On top of these things, the fact that there are applications and there are ways in which technology that is not currently known will do the same thing, is something to note.

I had the opportunity recently to speak to a venture tech firm, BlueChilli, that operate out of Sydney. They bring together capital and people who want to transform the way in which things are done at the moment through their own ideas, their own innovative energy, and completely alter the way in which people operate and conduct their business. These types of firms, from what I have seen—and this firm is based in the Sydney CBD—are doing remarkable things in terms of changing the way the business operates. And they certainly always encourage the innovators within their organisations to continue to think differently about what can be done, what we do now and how we can do it differently, and how we can add value to the economy. These are the types of firms that get unleashed when they have access to a technology that has been using, as a platform, what we are doing through the National Broadband Network.

Through this process we have tackled a massive capacity constraint. It is well known that the former government was told by bodies such as the Reserve Bank that capacity constraints would limit the ability of the economy to grow and that failing to do so would hurt the economy into the longer term. Those opposite tried, as has been reflected upon here, 19 times to address the fact that people could not get access to broadband. I represent people who had previously been stuck in a dial-up world—or a broadband wasteland, as I have described it—and faced very little chance that they would actually get access to modern telecommunications infrastructure. As a result of what we have been doing, we have been able, through a combination of the work being done by Telstra and the rollout being done by NBN Co., to free these people from being stuck with dial-up, which in this day and age is the technological equivalent of a dinosaur. We have freed suburbs such as Woodcroft and Doonside from that.

Last week my colleague the member for Greenway and I were proud to turn the NBN on in Blacktown with the minister for communications, Stephen Conroy. This has already seen 1,300 homes having access to the NBN at the outset. What has also been great is that RSPs like Telstra and Optus are out there now actively seeking customers and getting a tremendous response from customers who are wanting to sign up. In actual fact, if you look at the fifth report itself—and this is important—on page 19 it indicates that the revenue that NBN is receiving as a result of the RSPs going out and connecting customers and having this then flow back to NBN Co was $5.3 million and has risen by nearly $2 million since June of last year. So, in a short space of time it is already increasing the amount of money that it is generating as a result of customers coming onboard. And, as has been anecdotally indicated to me, once the customers get onboard with the NBN their usage changes. They use more and they want to be able to—and are certainly happy to—change their plans, because they are getting value for money per gigabyte that they are using as a household. And households like small businesses—for example, accounting firms that operate from home and design firms that operate from home—are now able to access a network. The more these home based businesses operate and the more people can change the way in which they work through telework, the more we will see other benefits. For example, in Western Sydney we are plagued very much by this issue of congestion in terms of traffic and the like. Being able to have economic development in local areas rather than having people feel that they have to travel long distances to conduct work will have huge economic benefit.

I mentioned earlier that there are other countries that have tried to do what we are doing. If you look at the US in particular, Verizon, through its fibre optic service, had gone to five states but has slowed down in its delivery because it does not have a dedicated investment program, unlike what is happening here. And Google is now rolling out fibre in Kansas and Utah and is expecting that these networks will operate profitably. Others are catching up and recognise that the use of this fibre instead of copper—fibre that delivers light at 300,000 kilometres per second and delivers a signal that has much more capacity and benefit and ability than anything that can be delivered on fibre—is a serious way in which to construct a future network.

That is why, when the opposition were in government, they had committees looking at this, and the member for Sturt even indicated in reports that he authored that, hands down, fibre is the best form of technology to deliver a modern broadband network. Certainly that has been evident, and there is very little to suggest otherwise. There is a suggestion that there will be a better form of technology—for example, a reliance on vectoring. Yes, vectoring does have its benefits, but most people will tell you that it is nowhere near as good as having fibre to the premises. Those opposite have had to come up with a policy for the sake of a policy but, having spent the best part of this parliamentary term determined to kill off this project, they have been unable to, due to two things. Firstly, they have an idea that nothing is wrong with the current broadband network in this country—and that does not stack up. Secondly, they have realised that businesses and the community expect a modern, robust form of infrastructure that will ensure that the country can progress in the years ahead and not stumble along in the way that they had been overseeing it when they were in office.

The opposition are continually focussed on the claim—and we continue to get this; we heard it from the member for Wentworth, and others, not necessarily those currently in the chamber, will probably bleat on today in reference to it—that NBN Co has failed to meet its forecast. In fact, the member for Wentworth today used the term 'catastrophic failure'.

Honourable Member:

An honourable member interjecting—

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

He is using a word that denotes something extremely harmful either in a physical or financial sense. Financial ruin would occur as a result of the failure, in their words, to meet the targets. It is an absurd claim. They well know that the 2011-13 corporate plan was produced well before any definitive agreements had been signed up, before one of the biggest corporate agreements was signed with Telstra and before the Optus deal was even finalised, to ensure the handover of their network and their agreement in terms of the way in which NBN Co rolls out the network. They know that no-one in this country could have predicted that the ACCC would have brought down a points-of-interconnect decision that would see the points of interconnection increase by a multitude, from 14 to 121. Those opposite had never predicted it. It suits their political argument to say that it does not meet the target, while neglecting to mention the things that have happened in between. Any company will have to, from time to time, confront roadblocks and work out how they structure their corporate plans accordingly. Those opposite are unable to have the decency to tell the Australian public why these figures had changed.

There is no doubt that this project, as it picks up speed, will roll out further and further, and will not necessarily be held up by the type of scare campaigns that have been put by those opposite. We had the member for Wentworth, for example, picking up on this issue of asbestos. No-one doubts for one moment that the issue is one that is critical and needs to be managed properly. Asbestos has sat in the Telstra system for decades, and then the member for Wentworth says in an offhand remark that this has been known for some time by NBN and Telstra. Yes, it has been known by Telstra. I would be interested to go back to the initial prospectus that was put out as it was being privatised to see whether or not it was denoted as a risk. What did those opposite do, when they were in government for 13 years, about the issue of asbestos? In any due diligence process you would know that it is an issue and you would have to deal with it. I would be interested to know now what the opposition, in government, did to mitigate risk.

The fact of the matter is that there are very smart people in Telstra, who, while they will not be able to pinpoint right now where these things are on a network map, will be able to determine this, based on likely roll-out. They will be able to deal with it where the roll-outs occur, at any point in time, and they do. For example, in Kiama, where Silcar was used on the project, they had trained up all their staff and ensured that all the equipment was present and did not have one problem with the issue of asbestos. Asbestos is being used as a Trojan Horse by those opposite. I am not having them now confect a concern about asbestos when I, like many other people, heard the dismissive words expressed by the Leader of the Opposition to Bernie Banton. It was one of the most disgraceful episodes I have witnessed and it is beneath the Leader of the Opposition. If he has found a concern about asbestos I welcome it, but he should remember that his previous words haunt him in this regard.

The other thing I want to mention is workforce planning. There has been a great deal of reference made in the report to workforce planning and subcontractor planning. It has been one issue that I have been particularly interested in from the get-go. Before my life here as a member of parliament, it was something that I represented as the national president of a union that covers workers in this area. We have enormous talent that exists out there that we need to employ and deploy on this project. One of the concerns that I have is that Telstra should be used more and more in the rollout of this project, because they do have people within Telstra, in the lines and in the field workforce, who can be used.

One of the regrets I have is that NBN Co. has been stuck in a model that has been used and employed for many years in the sector, which is a contract-subcontract model. I doubt very much those opposite will move away from it. My issue with it is that NBN Co. does not have an internal workforce, and that internal workforce could easily be supplied by Telstra. You will not necessarily need an asset manager into the future with fibre. Fibre obviously costs a lot to deploy but costs very little to maintain into the future. There are people within Telstra and we should be forming a relationship with Telstra so they can be used more and more on the rollout of this project. This will ensure that the skills that are there within the sector can be employed to their best possible ability. It will also ensure that Telstra can aid NBN Co. in what is critical for them: network mapping, being able to determine the structure of the network and having robust systems into the future. I welcome this committee and all the work that it has done. It has done a great job for this parliament. In particular I note the contribution of the chairperson. (Time expired)

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

I welcome the opportunity to speak on this rather concerning report. I noted that the member for Chifley said that the project confronted a few roadblocks, or a roadblock. I think the real concern here is that we are not confronting a roadblock, we are confronting a train wreck. We are confronting a train wreck because we have got a project that has not met a single target that has been set. That is of concern. They have had the opportunity to set the targets. They have not met one. By now we are supposed to be passing some 1.3 million houses. So how many houses or premises are we going to pass? We are not going to pass 1.3, we are not going to pass a million, we are not going to pass 500,000 houses. As we sit in wonder, the real question is: are we going to meet the revised, revised, revised target of 190,000 houses passed? Are we going to make it? I would suggest not.

Let us look at connections. Around about now, 511,000 houses were to be connected, in just a couple weeks. How many are we going to connect? If we are lucky, 20,000 to 25,000. This is a project that needs to connect 6,000 houses a day to meet the targets that it set for itself. This is not a target set by the opposition. This is the target set by NBN Co.—6,000 houses a day. I think you would have to believe in Santa Claus and the Easter bunny to believe they are going to achieve that.

If it were possible for things to become worse, well, they certainly have. NBN Co. is now further behind schedule that it was at the last report. The budget has blown out more than it was as at the last report. The rollout has slowed to a crawl. We have had the problems that have been mentioned by the member for Wentworth. We have the asbestos problem which that master of illusion, Mr Quigley, said was no real problem at all; 'no real problem at all', he said back in the April hearings. 'Don't you worry about that by golly, just a little bit of asbestos, not a problem at all.' Yet somehow he expects us to believe that, despite a range of sites being on hold, we are going to somehow meet the targets that he set for himself. History will show clearly that those targets will be missed. We have an interim satellite solution that is running out of capacity. We have NBN Co. staff rushing for the exits. We have an NBN Co. board that is trying to have the CEO removed from his post.

It is a project in crisis. It is a project that is heading for disaster. If a publicly listed company was in this position it would probably be in a trading halt—although I do not know that anyone would buy shares in NBN Co., given its past history, so a trading halt would probably be a mere technicality. A publicly listed company would be being required to make certain disclosures to the Australian stock exchange to get to the real situation with regard to the company. But, unlike a publicly listed company, NBN Co. is a black box. Every piece of information concerning this project must be prised out. We have this Orwellian regime of misinformation perpetrated by the CEO, Mr Quigley. He makes sure that absolutely no information that is useful is divulged to the parliamentary committee that has responsibility for oversight of this project.

We have tens of billions of taxpayer dollars at stake, and the Australian taxpayer is not being given clear and concise information as to the true status of this project. Every time the committee asked for information about the latest disaster we were told the information was commercial in confidence or that we somehow did not need to know this information. The only risk posed by releasing much of this information to the Joint Committee on the NBN is embarrassment to the government. And it is an embarrassment.

The chair of the committee, Mr Oakeshott, the member for Lyne, seems to be saying that everything is going okay. He said just yesterday that 'the NBN remains on track to deliver a rate of return to the taxpayer of over 7 per cent per annum'. Well, we will see. The member for Lyne is in fact complicit in the regime of deceit and dishonesty that this committee has had to endure. They are actually running a protection racket—

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

Deputy Speaker, I rise on a point of order. The member is making some very serious inferences at the member for Lyne. I think he has been here long enough to know his standing orders—I think he should withdraw those inferences.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

There is no point of order. There are other mechanisms of the house if the member has a concern.

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

I know the truth hurts, but I will move on with my contribution. Instead of talking about terms and allowing the light to shine in, the true status of this project remains a mystery. Let's look at the wireless rollout. What is the status of the wireless rollout? You guessed it, Deputy Speaker—behind schedule. We were supposed to have around 70,000 premises covered by the wireless network by 30 June. how much is it going to be? Is it going to be 70,000? Of course not. According to recent media reports, it is going to be 31,000 premises. The government will tell us it is right on target, right on track. We are not even halfway to the target that has been set by NBN Co. for itself—just another example. And they had the audacity to say that they underestimated the number of trees in regional Australia. It was a major technical hitch when they found there were big trees in regional Australia. It is a real concern.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

What was your last plan?

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

They underestimated the number of trees, Member for McEwen. They have entered into a whole range of agreements that have been problematic. When this project was conceived, the iPhone was released. Two years later the iPad was released. This project has not taken into account the huge shift in the amount of people using mobile networks.

One of the other concerns with this is that there has been a neglect of mobile services. There has been a total disregard for the situation with regard to mobile services in regional areas. In fact, Senator Conroy has said we are going to wait until the wireless network is rolled out in 2015 before we address the issue highlighted in the Regional Telecommunications Review—that of poor mobile services. I think the Australian people would be concerned as to whether the wireless rollout will be completed by 2015. We are not even up to half the scheduled rollout rate so far. I think you would have to, once again, believe in Santa Claus or the Easter bunny to believe that this government will bring it in by 2015.

Another interesting factor was in relation to the interim satellite service cap. It was revealed at the last round of the committee hearings that the interim satellite service cap of 48,000 customers would be reached by 2014, and the government has no intention of increasing the cap. So some people in remote Australia and in many areas of regional Australia will be left with no internet service for more than two years, until the long-term satellite solution is brought online. People who rely on the satellite internet will have no other option. The interim satellite solution is the only link for a range of customers.

The government said that it would be too expensive to increase the cap beyond 48,000. The minister said that it would cost $86 million to increase the cap by 7,000 customers from 48,000 to 55,000. I have to say that every person I have consulted in the satellite industry has said that those numbers are rubbish. It is widely accepted that there is sufficient capacity in the market to increase the cap to around 75,000 customers—an additional 27,000. The published cost for the interim satellite service is $300 million for 48,000 customers and, when you do the maths, that works out to be around $6,250 per customer. But, based on the minister's figures, to add 7,000 to the cap was going to cost an additional $12,285 a customer. How does that work? If you have been able to set up your overheads and all the costs of setting up the interim satellite solution at a total cost of $6,250 per customer, why does it cost you around double that to purchase additional capacity when it is available in the market? That is a mystery that remains unsolved.

If the cap is not increased the teams of installers currently working on the interim satellite solution will be disbanded and there will be a whole installation system and labour force that will need to be rebuilt from the ground up, which will mean it will take even longer for the NBN to roll out its long-term satellite solution. In reality the government has simply abandoned regional Australia by its failure to address this very important shortfall in the project with the need to continue the interim satellite solution past the cap. This is the government's track record, or NBN Co.'s track record, of being late with regard to everything.

This is a project that is of concern to taxpayers. It is a project that has not passed the test of accountability. It is a project that revolves around concealment and deceit rather than true transparency. I believe that, if the coalition were elected on 14 September, it will be the first opportunity to view the true status of this project and the true situation with regard to progress and costs, which have been concealed from the parliament to this point in time. So, I certainly raise very real concerns about the future of the project and I raise very real concerns about the accountability to this parliament.

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

I am very pleased to speak in support of the fifth report of the Joint Committee on the National Broadband Network. We come into this place to talk about the biggest infrastructure project in Australia's history and to have those opposite come forward and rubbish it, I think, says everything about their debate on the NBN that has gone on in this 43rd Parliament. Much to the coalition's despair, and unfortunately for them, the NBN keeps getting more and more popular as a policy.

I am disappointed because, for the last speech that the member for Wentworth is going to make in the 43rd Parliament on the NBN, I really wanted him to give a blow-by-blow account of the 'fraudband' launch. How awkward was it? It was awks to the max! The Leader of the Opposition was moving into the shadows and saying, 'Come into the dark, Malcolm. Come to the dark side.' I thought he was going to start speaking like Darth Vader. It was absolutely embarrassing to watch, but amusing at the same time. I was hoping that the member for Wentworth was going to talk about that, but alas, no. Their comments are despite the fact that people like Vint Cerf, the father of the internet, has given his blessing to this project on many, many occasions. This is despite the fact that we had the CeBIT conference in Australia only a couple of weeks ago where, again, we were lauded as a government for our forward-thinking policy on this matter. As well, the ITU holds up Australia as an example of best practice in national broadband rollout.

One of the biggest complaints I still get from people is not that the NBN is happening but is, 'When am I going to get it?' People have waited for so long in backwaters of not only regional Australia but outer metropolitan cities as well. I was disappointed he has left the chamber, because the member for Cowper talked about the government abandoning regional Australia. He is the bloke who sold out on regional Australia. I will give you some facts and I will give you some evidence to support that in just a moment.

Just to go back a bit, firstly, I feel sorry for the member for Cowper having to come in here and push the member for Wentworth's lines on this matter. But let's not forget that when Telstra was fully privatised, when those opposite were in government, the Nats were absolutely sold down the river. They took all the elements that should have been about regional accessibility and affordability, moved them into a separate piece of legislation and told everyone that that would be okay. The member for Chifley mentioned it but I will talk a bit more about the sell-off process that not only led to issues with the Telstra pits that we see today but also made Australia, and confirmed Australia's position as, an absolute broadband backwater—behind countries like Estonia and many countries of Eastern Europe.

I will not have the member for Cowper coming in here and saying these things. He talked about mobile and fixed. I feel like I have been giving this same lecture, the same lessons, to some people opposite over and over again. The inability to understand the difference between mobile, wireless and fixed wireless is simply beyond me. It is a debate that was settled many, many years ago—that mobile and fixed are complementary, not substitutable, and that fixed wireless services require a backbone. In this case you look to the best backbone that you can build to maximise capacity, and that is a fibre backbone. It is no wonder that mobile operators are enthusiastically embracing the NBN for the opportunity to fibre up their base stations.

The member for Cowper talked about the lack of mobile access. In the early 2000s we had an attempt to introduce USO contestability in Australia. We had a pilot project for the Pacific Highway, running through the member for Cowper's own electorate, for which bidding was done, and which resulted in absolutely no measurable improvement. So the only thing that was done on this matter by those opposite when they were in government on this matter was an absolute, abject failure.

I will take up a few issues to do with regional Australia, which is one of the things I really want to talk about in relation to this particular report. There is the issue of a universal wholesale price under Labor's NBN versus there being no equivalent under the broadband plan of those opposite. I will quote from the Hansard of the public hearing on Friday 19 April. I specifically asked the question of Ms Teresa Corbin of ACCAN:

I presume you are also aware that the government has imposed a universal wholesale price for the NBN and, in light of your comments about affordability, how important is it not to discriminate against people who live in outer metropolitan areas and regional areas?

She answered:

This is very important to our members.

I went on to ask:

What feedback do you get already from consumers living in regional areas in particular about things like the digital divide?

She went on to explain how it is very important for people living in regional Australia to have the same opportunities for affordability and accessibility as those living in the city. Yet again, I am disappointed he did not stick around. I ask: what did the member for Cowper do to improve broadband in his electorate when he was part of a government? How many failed plans did we have from those opposite that produced no measurable improvements in broadband across Australia?

I would like to turn to something the member for Wentworth took some time mentioning—chapter 4 of the dissenting report, and specifically item 4.1. To be quite frank, I find it rather tawdry that those opposite want to come in here and start talking about—it is like a gossip chapter—the new chair of NBN Co. and the CEO of NBN Co., quoting various articles from News Limited, from The Australian and the Australian Financial Review. They have a recommendation in which they cannot even spell Ms McKenna's name properly, but I digress.

It is absolutely ridiculous for the member for Wentworth and those opposite to have spent so much time and energy on a chapter called 'Unstable governance and question over board's confidence in CEO.' Something that I learnt very early on—and I would have thought the member for Wentworth, as someone who is always coming in here talking about all the big deals that he has done with Rupert and friends, would have lectured me on this—is that the people who you are sitting opposite to and doing a deal with may one day very well be the people on your team. You do not want to go off making bizarre accusations and relying on hearsay and gossip. You want to rely on the facts. I find it absolutely ridiculous for the member for Wentworth to choose to spend so much time on this particular issue. He does himself great discredit. It is merely an attempt to again try and smear Mr Quigley. Whatever reasons he has for doing that, they are his own and I will leave him to it.

We again had those opposite come in here and start talking about the rollout targets. But the reality is that at the end of May NBN Co. was on track to beat its revised June rollout targets and to pass between 171,836 homes and 185,808 premises with fibre by the end of June—far exceeding its set target. It must be very disappointing for those opposite to have seen support for Labor's existing policy increase after those opposite released their policy. Prior to the release of 'fraudband', 73 per cent of people surveyed supported Labor's NBN. After 'fraudband' was released, that went up to 78 per cent. That must be striking a very raw nerve.

I have called out MPs before who say one thing in their electorates about how much they support increasing broadband opposite but who do something else when they come to Canberra. I am going to call out a few more. You will like this one, member for Moreton. This is a special one from the member for Moncrieff. On 5 June he sent a letter out to his electorate. I do not know what is the most disturbing thing about this. The opening line reads: 'Access to fast broadband is no longer a want; it is rapidly becoming a need for Gold Coast households and businesses.' It is not already a need? 'It is rapidly becoming a need'? Then there is a typo, but I digress. There are then some claims made. I quote: 'When Labor first announced the NBN in 2007, they said it would cost around $4.7 billion and be completed by 2013. Since then, Labor changed the forecast and said it would cost taxpayers $37 billion. Now we know it's actually going to cost taxpayers around $94 billion.' Where does this come from?

I specifically asked the NBN Co. about this when it appeared before the committee. And remember that these committee proceedings had the same rules as the parliament. I said:

Mr Quigley, I want to go back to your briefing at the start, just to be crystal clear. The NBN costs $37.4 billion. What veracity should then be given to assertions that the NBN cost could in fact be around $90 billion?

Mr Quigley said:

I can only repeat that we are confident of the $37.4 billion figure.

Then I asked:

Do you know how that $90 billion figure was derived?

Mr Quigley said:

No.

How on earth can these people get away with making continuous false claims? I will quote some comments from Delimiter about this particular letter:

… other elements of Ciobo's letter are demonstrably inaccurate, delivered without context, or could be considered highly contestable, in that they do not represent mainstream thinking in the telecommunications industry from the consensus of expert opinion.

There is a lot more that I could say about that one. But in the time available I will instead move on to the member for Calare.

The member for Calare claimed a couple of weeks ago that the coalition's national broadband policy would guarantee speeds of at least 25 gigabytes to all Australians by 2016, with Labor's policy to deliver a mere 100 kilobits. Now, 25 gigabytes is a pretty quick download speed. He also claimed that the coalition has guaranteed at least 25 gigs for everybody by 2016.

It gets better. We have the Leader of the Nationals on Insiders with Barrie Cassidy a couple of weeks ago. This is pretty special; it was quite embarrassing to watch; the guy had no idea. He was asked by Barrie Cassidy:

In your speech to the National Council meeting yesterday—

which I presume was the Nats' meeting—

you raised the NBN … you said under the Coalition every country household will have access to high speed broad band with a minimum speed 25 megabits per second, but how much will it cost householders to have access to that?

Mr Truss could not answer. He said:

Well it will be significantly cheaper than the NBN.

Mr Cassidy asked:

The NBN, under the existing arrangements, the access will be free?

Mr Truss answered:

… there will be still charges for … signing up.

Mr Cassidy said:

Yes but we're talking about connection fees to the house.

Mr Truss said:

Our connection fees will be lower.

He was absolutely incapable of answering the question.

The member for Chifley addressed some very important issues concerning asbestos. I too would be very keen to see what was in the documents when Telstra was fully privatised and what due diligence was done. There was the material risk in that everyone knew that many of those pits were built before World War II and would have asbestos lining in them. I do not remember any of the Liberals or the Nationals getting up in parliament at the time—and I followed the debate very closely—and saying, 'In the future, someone is probably going to open those pits and do some work in them. We'd better cover off this risk.' This has been uncontested: a direct result of the sell-off was the number of permanent staff that were made contractors. What was said in those public offer documents, in the sale documents, about the potential risk of having staff who become contractors rather than being directly employed by Telstra? I would be very interested to know these things.

I will end by saying that this continues to be a very popular policy with the Australian people. I know it is popular in my electorate. Firms have moved to my area just to take up the benefit of the NBN, including the Good Egg Studio at Riverstone. The member for Wentworth came to Blacktown and admitted that Blacktown would become a city divided: people who have access to the NBN and those who do not. That is not what we want from the National Broadband Network.

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

I am very pleased to rise to speak on the fifth report of the Joint Parliamentary Committee on the National Broadband Network. When you look at this report, the thing that is most striking is the contrast between a view of the world as some would wish it to be—including, I note particularly, the chair of the committee, the member for Lyne—and the view of reality. There is quite a disparity between the two. The member for Lyne is an unashamed true believer in the marvels of the National Broadband Network in the present form in which it is being implemented by the Labor government, which he helped bring to power. In his chair's foreword, he said about the National Broadband Network:

It will make a big difference in many lives. It will strengthen our economy. It will promote our cultural identity in a flattening global culture … it will create opportunity and deliver equity for all Australians.

He repeats the claim that it will 'promote Australian culture to the world', 'show respect to sectors like education as our second biggest export market'. The powers of the NBN appear to be almost limitless in the faith of the member for Lyne. He says it will 'play to our strengths by unlocking entrepreneurship as a nation'. He says:

What an opportunity to promote Australia and expand our export economy by getting this build right.

The chair of this committee, the member for Lyne, is a true believer in the capacity of the National Broadband Network to do all of these things.

But I have to say, when I hear these overblown claims about what the NBN will do, my response is: no it won't. At the very highest, you could put the argument as follows. You could argue that the NBN is a necessary but not sufficient condition to achieve these marvellous outcomes—to promote Australia's cultural identity to the world, to unleash entrepreneurship. But to claim that building the NBN will 'deliver equity for all Australians' or will 'unlock entrepreneurship as a nation' is, I would suggest, an example of the kind of dangerously woolly thinking that is causing us to splash away so much money without being careful in our analysis of what we are getting for the money. It may be possible to argue—and it is a contentious proposition—that if you build and deliver an effective national broadband network it will encourage economic activity, it will encourage entrepreneurship. But there is that distinction that was hammered home in first-year philosophy: it may be a necessary but it is certainly not a sufficient condition. It is not enough to argue, as we repeatedly hear from the member for Lyne and other advocates for the NBN in its present form, that the mere construction of this network will lead 1,000 flowers to bloom. That is not true. There is much more that needs to happen. It may be that the NBN will assist in a range of outcomes, but it will not do it by itself. And to suggest, as the rhetoric in the chair's forward suggests, that it is sufficient to achieve these objectives, is misleading and is an indicator of the kind of fuzzy and woolly thinking that sadly has bedevilled far too much political commentary about NBN Co.

So, if the first objection that I have to the particular philosophy that is articulated in those introductory comments is to say that, even if you believe all of these claims, at best the NBN can be a condition towards achieving the outcomes and much more needs to happen, then the second—and even more substantial—objection I have is this: before any of these wonderful claimed outcomes can be expected, you need to get the thing built, and you need to get it done quickly, cost-effectively and efficiently. And if there is one thing that is clear, as we look at the state of progress with the National Broadband Network, when you turn your eye away from the lofty claims about the marvels that this network is going to deliver, and get on to the more prosaic level of what is actually happening now—how much money has been spent, what we are getting for it, whether the rollout is on time and whether the network been well designed—the answer to all those things is: this is a mess.

So the coalition makes no apologies for turning our eyes away from the wafting vision of the sunlit uplands, which the member for Lyne has once again been all too eager to lay before us. We make no apology for turning away and looking at the detail—and the detail is a very, very troubling picture. The proper role of this committee—on behalf of the Parliament of Australia and in turn on behalf of taxpayers who are compulsorily investors in this badly designed and ill conceived project—is to ask: how is it going? How much money is being spent? What is happening with the rollout? What confidence can we have that the project as presently conceived is going to be completed? All of that must necessarily and logically come before turning our minds to the marvels that the credulous member for Lyne appears to believe are just over the horizon.

I am a very strong believer in broadband. I am a very strong believer in the economic and social benefits of broadband. I have worked in the telecommunications sector, both in government and in the private sector, for many, many years. In fact, I am so interested in broadband that I wrote a book about it—and what a festival of pointy headedness that was, if I may say! But I would make the point that it is simply not good enough to have these wafting generalities in the report that we have before us. We need to get into the detail on behalf of the parliament and on behalf of the Australian people to ask the detailed question, how is the rollout going? And when we turn to that question, the answer is unambiguous. The rollout is going very, very badly. Let us start by looking at some of the numbers. By 30 June 2013, according to NBN Co.'s first corporate plan released in December 2010, this network was supposed to pass 1.3 million premises. In fact, on the most recent numbers, as at May this year—so there is only a month to go—it had passed around 103,000 premises. We also see that the estimates of usage of the network are well behind what is forecast and we also see, extremely troublingly, that the build of the fixed wireless network is running into difficulty and is behind schedule and at the same time we see that NBN Co. continues to burn through cash and spend lavishly on headcount.

Let me make this particular comment, coming as I do from a background in the telecommunications sector for many years. It is an open and notorious joke within the telecommunications sector that people are leaving existing telcos, particularly Telstra and Optus, and have been doing so for several years to go to roles at NBN Co. where they are paid very substantially in excess of what they were previously paid by their previous private sector employer. There is no question that NBN Co. is spending in a profligate fashion and is spending on staff and on other things in a way that no private sector telco would do.

At the same time, the rollout is scandalously behind schedule and the performance which has been delivered is absolutely hopeless if you compare it to any benchmarks of what has been done. I cite, for example, the rollout within one year of the 3G network, the Next G network, under Sol Trujillo at Telstra. I have been critical of Sol Trujillo on many occasions, but Telstra's delivery of the Next G network within a very short period of time was an impressive engineering achievement. Or you could look at the rate at which both Telstra and Optus rolled out their HFC networks, their hybrid fibre-coaxial networks, across many cities of Australia during the mid-90s. If you look at the rate at which those networks were rolled out and you compare it to what has been achieved by NBN Co., it is chalk and cheese. Or you could look across the Tasman and you could have a look at what is being done in New Zealand. By December 2012, the Kiwis, with their fibre rollout, had passed 134,000 homes. Bear in mind that at that time NBN Co. in Australia had passed 72,400. The two rollouts began at roughly the same time. Australia is a country five times as large. If we had matched the performance of New Zealand, we would have been at several hundred thousand by December last year.

Wherever you go, if you look at the private sector and its history of rollouts, both fixed and mobile in Australia, and if you look across the Tasman at an analogous rollout of a fibre broadband network, you see that NBN Co. is doing a very poor job against those benchmarks. Indeed, if you are looking for tangible evidence that the rollout is well behind where it was expected to be, you could look at the fact that funding in the budget in 2014 was reduced by $3.5 billion compared to what had originally been proposed as recently as the October Midyear Economic and Fiscal Outlook. Why is that? It was not a conscious cost reduction strategy or fiscal discipline by the Treasurer, because that is not the kind of Treasurer that we have. It is because the rollout is running well behind time. Those budget cuts are a consequence of a delay in the rollout.

So when we look at the very basis, the very centre of what this committee should be focused on, on behalf of the taxpayers of Australia, in having oversight of this rollout and determining whether taxpayers' money is being spent well, whether the project is being managed efficiently and cost effectively, there is no conclusion which can be reached other than that there are very serious red flashing lights here. This rollout is in a mess and it is in a mess, unsurprisingly, because we have a government which is absolutely atrocious at implementation. We have seen that with school halls, we have seen that with the home insulation program and we are seeing it as well with the National Broadband Network. I mentioned the fact that the fixed wireless rollout is a long way behind schedule. According to the Australian Financial Review, even in the best case scenario by the end of June the wireless network will cover just 31,291 premises, which is only 45 per cent of the target of 70,000 that the fixed wireless network was supposed to reach.

I come now to a question I have touched on already and will deal with in a bit more detail: the question of the NBN's management of human resources. There is no more important task in running a company than in managing your human resources efficiently. That means getting the right people in to do the job. It means paying them what you need to attract them, but no more—I have already talked about the extent to which NBN Co. has paid well in excess of market levels. It also means maintaining a capable team in place rather than churning through executives, senior management and directors on a regular basis. Unfortunately, from NBN Co. we have seen a very substantial amount of churn amongst senior management and indeed amongst directors.

We are also seeing a very rapidly growing head count for NBN Co. As at the end of February there were 2,477 employees. That is an increase of nearly 50 per cent on staff numbers in June 2012. So this company is continuing to grow without restraint. It is continuing to add people even though the rollout, the core job it is there to do, is running very badly behind plan. This is a very significant contributor to the overall cost of this project, a cost that taxpayers are funding. It is another indicator of the way in which basic financial disciplines that you would see in a similar private sector investment project have been troublingly absent.

On the question of churn of employees, since October 2009 some 14 senior executives and 55 executive level employees have left the company. There does appear to be significant evidence of unusually high levels of churn amongst the senior management team and amongst directors.

I will close by referring to one other point that is touched on in this report, which is the meandering discussion about whether more private equity should be sought for NBN Co. This is something of an interest of the chair. It is a ridiculous interest that makes no sense, because the legislation says that you cannot have private sector equity until the build is finished, and five years later. The chair voted for that legislation, so he should know that.

Debate adjourned.