Scott Ludlam (WA, Australian Greens) Share this | Hansard source

I rise briefly to point out that the motion before us relates specifically to the question of an independent cost-benefit analysis. Senator Fifield’s motion talks about appropriate parliamentary and economic scrutiny. I will address each of those three issues but I will confine my remarks mainly to the issue of cost-benefit analysis, which I think has dominated the debate up to this point. In terms of appropriate parliamentary scrutiny, the Senate Select Committee on the National Broadband Network travelled around the country for two years. I am not sure whether Mr Turnbull was aware of that. We have actually done quite a bit of work in the Senate in scrutinising this proposal.

The Greens and the coalition voted to compel the Australian government to hand over the $25 million McKinsey-KPMG economic study. That is now somewhat dated, but that document was put into the public domain as a result of the scrutiny that this chamber has been placing on the national broadband network project. So I think it is a little disingenuous for the opposition to suggest that nothing has been happening when in fact they have played a part in holding this project to account for the last couple of years, as have the Australian Greens.

As I said, the McKinsey-KPMG study cost taxpayers $25 million. It is unfortunate that the opposition did not like what it said, but that document was put into the public domain as a result of the Senate doing its job. It is time that document was updated. It is time we saw the proper business case. When Mr Turnbull’s bill comes into the chamber, sometime in November, the Greens will decide how to vote on that bill based in part on the business case which Senator Conroy insists will be in the public domain—Mr Quigley and NBN Co. is handing that to the government as early as this week.

I am very interested in that business case, because it will tell us whether NBN Co. is going to be a viable organisation. We might have a debate about whether it needs to be. Hospitals do not make a profit for the taxpayer, neither do roads and neither do electricity networks necessarily. We should have a conversation about whether world-class telecommunications need to provide a profit or not. As it happens, the McKinsey-KPMG study says that the NBN Co. will return seven per cent or thereabouts back to the taxpayer, which is a reason we believe it should be held in public hands. But those numbers need to be tested and gone through forensically. That cannot happen until we get the NBN Co. business case.

So, for the Australian Greens that document is of vastly greater importance than a cost-benefit analysis. A cost-benefit analysis is not necessarily the right instrument to apply to a project of this kind. It is relatively easy—and I have spoken on this issue a number of times in here—to quantify and monetise the costs of rolling the network out and even to estimate the net present value of the network once it is built. But how on earth do you monetise the estimated future benefits, for all time, for rapid telecommunications when they do not even exist in Australia at the moment? The way you do that is by making numbers up, and that is the reason a cost-benefit analysis is not likely to be the political weapon the coalition thinks it will be. We need to sit up and take note when somebody like ACCC chairman, Graeme Samuel, says the cost-benefit analysis will not necessary tell us what we need to know.

The coalition is looking for something similar to what Professor Henry Ergas put into the public domain in August 2009—an attempt to monetise the benefits, a magic number calculated using a variety of mathematical tools. Professor Ergas’s magic number was $17 billion, beyond which, he said:

… it is irrational to spend more than $17 billion on the NBN, even if the alternative is a world in which the representative consumer cannot obtain service in excess of 20 Mbps…

To his credit, at least he had a go at doing a cost-benefit analysis. But this number came out of very complex and difficult to critique mathematical formulae—no sensitivity analysis and no idea about what assumptions were plugged into it. How do you put a dollar figure on the estimated future benefits of the NBN?

We need to tread very carefully before we say that a cost-benefit analysis is the final piece of evidence on which the case should rest. The business model is important; it will tell us whether this thing is going to make a profit or a loss to the taxpayer. I think the cost-benefit analysis, if we are not very careful, runs the risk of being a very serious red herring in this debate. So we will see what the government and NBN Co. put into the public domain before we make a judgment call on the value of potentially wasting the Productivity Commission’s time with a six-month cost-benefit analysis.