Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Hansard source

by leave—I move opposition amendments (2) to (11) on sheet 7133:

(2)   Schedule 1, item 10, page 4 (after line 23), after the second dot point, insert:

If a compliant optical fibre network is installed in such a fibre-ready facility, NBN Co will pay the cost of installation.

(3)   Schedule 1, item 10, page 6 (line 18), omit "the conditions (if any)", substitute "any technical standards and other conditions".

(4)   Schedule 1, item 10, page 6 (line 25), after "specify", insert "technical standards and other".

(5)   Schedule 1, item 10, page 6 (after line 26), after subsection 372B(4), insert:

(4A)   The Minister must consult the ACMA and relevant industry bodies before making an instrument under subsection (4).

(6)   Schedule 1, item 10, page 6 (line 28), after "paragraph (1)(b)", insert "or subsection (4)".

(7)   Schedule 1, item 10, page 8 (line 10), omit "the conditions (if any)", substitute "any technical standards and other conditions".

(8)   Schedule 1, item 10, page 8 (line 17), after "specify", insert "technical standards and other".

(9)   Schedule 1, item 10, page 8 (after line 18), after subsection 372C(4), insert:

(4A)   The Minister must consult the ACMA and relevant industry bodies before making an instrument under subsection (4).

(10)   Schedule 1, item 10, page 8 (line 20), after "paragraph (1)(b)", insert "or subsection (4)".

(11)   Schedule 1, item 10, page 9 (after line 4), after section 372C, insert:

372CA Purchase by NBN Co of installed optical networks

     Scope

(1)   This section applies in relation to the project area, or any of the project areas, for a real estate development project:

  (a)   that is compliant with Division 3; and

  (b)   in which a compliant optical network is installed by a person other than NBN Co.

NBN Co to purchase network if requested

(2)   The person or persons responsible for the real estate development project may apply to NBN Co for NBN Co to purchase the network in accordance with this section.

(3)   An application for the purchase of a network must be made within 3 months after the completion of the network.

(4)   The person or persons responsible for the real estate development project must provide NBN Co with such information and access as NBN CO requires to satisfy itself that the network is a compliant optical network.

(5)   NBN Co must purchase the network within 30 days after receiving the application.

Amount of payment

(6)   The amount of the purchase payment must be in accordance with a scale of payments determined by the Minister for this subsection and published in the Gazette.

(7)   The Minister must determine a scale of payments for the purposes of subsection (6) as soon as practicable.

(8)   In determining a scale of payments, the Minister must take into account:

  (a)   the typical costs of providing such networks or elements of such networks, including significant regional variations in costs; and

  (b)   the costs that NBN Co would have incurred had it undertaken to provide such networks itself.

Interpretation

(9)   For this section, a project area of a real estate development project is compliant with Division 3 if:

  (a)   section 372E or 372F applied to installation of a fixed-line facility in the project area; and

  (b)   any fixed-line facilities installed in the project area that were subject to subsection 372E(2) or 372F(2) complied with those subsections.

Note:   These subsections require that the facilities be fibre-ready and that the installation comply with an instrument under subsection 372E(4) or 372F(4), subject to exemptions under section 372K.

(10)   For this section, a compliant optical network of a project area of a real estate development project is a collection of optical fibre lines in the project area, each of which:

  (a)   is wholly or primarily used, or wholly or primarily for use, to supply one or more carriage services to either or both of the following:

     (i)   one or more end-users (whether or not identifiable) in one or more building units;

     (ii)   one or more prospective end-users (whether or not identifiable) in one or more building units; and

  (b)   is not on the customer side of the boundary of a telecommunications network; and

  (c)   is used, or for use, to supply a carriage service to the public; and

  (d)   for a line being deployed to a building lot—was installed in compliance with the conditions for such lines in an instrument under subsection 372B(4); and

  (e)   for a line being deployed to a building unit—was installed in compliance with the conditions for such lines in an instrument under subsection 372C(4).

As we proceeded to these amendments the Minister for Broadband, Communications and the Digital Economy asked why not move all the amendments together. That would have suited the minister because he wants to bundle all of the arguments against the opposition's amendments together. That was obvious in the pitch that he made to Senator Madigan in particular as he argued vehemently that all of the opposition amendments were about undoing the NBN's business case, that all of the opposition amendments were somehow about ensuring that the best parts of Australia could be cherry-picked, that all of this was purely about destroying the NBN. That is not true, and it is not true for either set of amendments.

It is particularly noteworthy that this first set of coalition amendments, amendments numbered (2) to (11) inclusive, tries to look at the best possible way to actually get the NBN built, or fibre laid, in greenfield sites. These first amendments do not touch on cherry-picking in terms of retail delivery; they do not touch in that sense on the actual retail side of operations. The first set of amendments proposes, along with a number of consequential changes, a new section 372CA that will provide for the purchase of installed optical networks by NBN Co., and would insert that in division 2. This proposed section is intended to enable developers, whose development project has an installed fibre network that is compliant, to have the option of requiring NBN Co. to purchase that network at a reasonable price. The govern­ment's system has been set up to provide for this default arrangement whereby NBN Co. operates as the provider of last resort for fibre in new greenfield developments, but it is a default version that is very encouraging, it is a default provision that is very attractive, because if developers do not go with NBN Co. as the provider of last resort they will have to pay more for the facilities to be provided to the properties they are developing. So NBN Co. will come along and, as it is doing across the country at taxpayers' expense, lay the fibre up and down the ducts and pits that have been installed in new developments, or they can, at their own expense—or of course at the expense passed onto those purchasing properties in the development—pay someone else to lay the fibre up and down the ducts and pits. This first set of opposition amendments seeks to provide a capacity for developers to use existing or new, if they wanted to start up, private competitive greenfields operators—people who install fibre in those greenfields developments—and do so in the knowledge that if they have them lay out the fibre in their communities then they can recoup the cost of that by selling on a per connection basis the service that has been laid out to NBN Co., not an unlimited sale or price but simply selling at an agreed price.

Importantly, in this construction space, it is not the retail space, it seeks to preserve some modicum of competition. The opposition heard consistently during the inquiry into this legislation concerns from many people in the business of laying fibre that the government ran the risk of putting in place a system in which developers had the choice either to pay somebody to lay fibre or wait until NBN Co. does it for free. Guess what most of us do when we are given that choice? We will take the option of getting it for free.

The result is the monopoly that NBN Co. already has over laying fibre on brownfield sites—up and down all of our streets and homes in existing developments—is extended to this greenfields space where there is an already existing market. As the minister acknowledged, people are already laying fibre up and down the streets of new housing developments at the instigation of those developers. There is a market there. This bill, if passed unamended, will change and distort that market in a way where it will become far, far more attractive for developers to simply leave it to the last resort provider, to NBN Co., to come along and do it itself.

So what have we done if we allow that to occur? There are several consequences. We have enhanced the NBN monopoly into these greenfield sites. In doing so, we have put a number of existing businesses out of the business of laying fibre because their business opportunities will have dried up. We will also create the perverse effect whereby the provision of fibre to these new developments will take longer than may otherwise occur. The developers will wait and trigger the last-resort provisions rather than take the opportunity to get the fibre installed into the ducts and pits of these new developments at the first available opportunity.

The coalition's amendments seek to ensure that developers have additional choices beyond the default option that the government has established, which over time would become the only option in many instances. When developers want to build a new development with fibre-ready facilities, they have a choice to go to the market and find complying businesses which will lay a compliant network that can be sold on to the NBN Co., hopefully at costs cheaper than the NBN Co. would be able to deliver it itself. Certainly, it would be at agreed regulated prices to ensure that there is not price gouging in this space, but hopefully to also apply some level of cost discipline upon NBN Co. by requiring it to purchase connections at reasonable prices which will be set at a price no greater than the NBN Co.'s own average cost of installing a connection. What it costs NBN Co. to install a connection is the maximum price that these private operators would be able to operate under. This would mean that if NBN Co.'s competitors can build connections at a lower charge than NBN Co. then there is a cost saving that can hopefully flow through to all.

As I indicated, there is a benefit to end users as well. The likelihood of incoming residents of new developments having active fibre services connected to their premises is increased by pursuing this approach. This approach was canvassed during the inquiry into this legislation. It was canvassed widely with a number of the witnesses who appeared. I highlighted during my contri­bution on the second reading of the bill that the Urban Development Institute of Australia, when asked about the proposed amendments that I have just moved on behalf of the opposition, said that it was a pragmatic suggestion. It said:

... that is a pragmatic suggestion. In relation to the certainty question you asked me before, that is what is confronted by developers—how and when are things actually going to be done? Whatever brings around greater certainty for purchasers of those properties that all the utilities are actually there and are available and can be handed over to them and the greater that certainty is, the better it will be.

This amendment increases the certainty that all of those utilities, all of those services, will be there. In particular, the fibre service will be there for them rather than waiting until a last-resort provision is triggered and NBN Co. eventually gets around to rolling it out up and down their street.

One of the businesses in this sector, OptiComm, when asked about the proposed amendment, told the Senate inquiry that it would provide advantages. OptiComm said:

... there would be some advantages in what you are saying to what is currently proposed. That allows diversity in the greenfield. As I have said, we have been successful. Not only do we offer broadband and voice but we offer a number of other services that some developers find attractive. It would still allow them to do that and allow them to keep that network operating through companies like ourselves or allows them the offer to transfer that ownership to NBN Co. I think that is what you are suggesting. We would never love to build a network and see it go to someone else, but I think the concept is better than where we stand today.

This is one of the existing developers going to greenfields sites, to new developments, laying out networks there and, as part of their business model, selling on a retail product, as well as having to comply with provisions which make that available elsewhere.

The amendments we are considering now do not impact on the retail side of things. They would see Opticom sell that service, that network, to NBN Co. but utilise their expertise, their skills and their capacity for competitive delivery of this fibre and utilise it in a way that will actually allow NBN Co. to hopefully access fibre laid in greenfields developments in the fastest possible way at the lowest possible cost. In relation to these greenfields developments that should surely be exactly what we all want to see.

TransACT, a large provider in the ACT of fibre to greenfields developments, equally indicated their support for this amendment and the approach it takes. They commented that a situation where different parties are responsible for installing a fibre network does not necessarily provide the best outcome. Essentially, TransACT said, 'We believe that where the developer puts pit and pipe into the development creates a situation where we have a tripartite type arrangement. You have the developer putting in pit and pipe. You have a fibre operator coming in subsequent to that. What we typically provide to the developments is a turnkey solution. We deploy the fibre and the pit and the pipe all together to the developer. We believe that having a situation where it is pip and pipe only is not necessarily the best outcome overall.'

So TransACT believe that the best outcome overall is to have the pits and the pipes built by the same person who lays the fibre and to provide a complete solution to developers in greenfields sites. It sounds like a logical approach. They indicated their support for this amendment as a good way of ensuring that you have that complete package provided. You get maximum efficiency from doing so and in this scenario the taxpayer gets maximum efficiency from doing so.

I will shortly move subsequent amendments that do go to the potential for retail service provision by these companies. The amendments look at the opportunities for these companies to maintain existing business models that see them not just build the networks but provide a retail service as well. However, those are separate amend­ments. This amendment is really to do with and focused very much on the actual building of the network. We believe that it provides good strong advantages to the operation of this bill. We believe that, rather than allowing this bill to end up having the effect of destroying many companies that currently roll out fibre in greenfields spaces, this would in fact enhance the opportunity for them to do so and, hopefully, potentially improve the outcomes for the NBN as a result of it.