Kimberley Kitching (Victoria, Australian Labor Party, Shadow Assistant Minister for Government Accountability) Share this | Hansard source

The interest bill alone from that increase is nearly double what this levy raises.

Lastly, we recently learnt that, in the 2020 corporate plan, regional investment was quietly reduced by $200 million. This is despite the government incorporating revenues from this unlegislated levy into the NBN corporate plan. What this means is that, even after the government took into account the revenues this levy would raise, they went ahead and agreed to reduce funding for the regional fixed wireless network anyway. It raises a legitimate question: why are the government progressing a $7-per-month broadband tax in the name of regional funding while reducing regional NBN investment at the same time, and why did they try to conceal this funding reduction in the 2020 NBN corporate plan?

The tempered reality is the levy before this parliament will not have a material impact on the regional NBN funding profile. It adds $40 million to cross-subsidy revenues against an existing baseline of $800 million per annum. Further, it does not come close to offsetting the reduction in NBN cash flows resulting from the switch to an economically compromised multi technology mix. So you may be wondering: what is the primary purpose of the levy? Well, when you strip away all of the rhetoric, the minister wants to reduce competition with NBN by placing a tax on companies that compete with NBN. Reducing competition will in turn help protect the current revenues that NBN generates. Deterring unnecessary and counterproductive duplication of fixed-line infrastructure is important given the considerable investment taxpayers have made.

Labor has been upfront and consistent about its position on this. We do not want to see fixed-line networks over-building each other; however, the government doesn't have the decency to admit this is what this bill is actually about. On 28 November 2019, the Senate referred the Telecommunications (Regional Broadband Scheme) Charge Bill 2019 to the Senate Environment and Communications Legislation Committee for inquiry.

Before I go to the bill, it's important to cover some of the history. Prior to the 2013 election, Mr Turnbull, the former Prime Minister, and others were running around encouraging private companies to compete directly with the government-owned entity. They didn't do this out of principle; they did this because they wanted to wreck the NBN. They wanted it to fail because it was a Labor concept. Then, 10 days after the 2013 election, TPG announced it wanted to expand a fibre-to-the-basement network in inner city areas to up to half a million homes. As you would expect, this created alarm both within NBN Co and within the government. They understood, as anyone with common sense would understand, if TPG began cherry-picking profitable parts of the fixed-line NBN footprint, then the economics of the project would become unstuck. This was not in the interests of taxpayers and it was not in the public interest given the NBN was at that point a reality.

The concept of what was to become the proposed broadband levy was considered as part of a government-initiated Vertigan review in 2014, which examined different options to offset NBN's losses in fixed-wireless and satellite networks. The minister has claimed that the government adopted this levy because it was a recommendation of the Vertigan review; that is not true. Allow me to quote what the Vertigan review report actually said:

By far the best option for funding any ongoing subsidy would be through consolidated revenue. Among other advantages, that would allow Parliament and the public to assess in an ongoing way the benefits of using taxpayer funds for this purpose rather than others. However, should that option not be adopted, the panel recommends that, if an ongoing subsidy is required and its minimum amount can be reliably determined, a single, annual, broad‐based industry levy, covering both voice and broadband services, be imposed to fund that subsidy. This would be similar to the current arrangements for the Universal Service Obligation (USO), which are outlined in Appendix 3.

Let us make two things clear. First, the Vertigan review did not recommend a levy on the industry and consumers as its first preference; its preference was funding from consolidated revenue. Second, the levy recommended by the review was a broad-based levy. The bill before us does not propose a broad-based levy. The government have designed a levy with a narrow base in order to produce a high charge. The reason they have done that is for the purpose of preventing competition.

The public then has to put up with the spectacle of the minister writing an op-ed pretending that the bill is about competition, and this brings me to an important point. The coalition have built an inferior NBN for $51 billion. This has cost taxpayers more than the original fibre network; it costs more to operate. The older technologies also require more future funding for upgrades that would not have been necessary under the original plan. At a speech to CEDA last year, the minister said:

We are going to need to rely on and boost competition to make sure that our fixed networks continue to upgrade and stay in tune with world developments.

Yet the legislation being proposed by the minister directly contradicts this statement. This bill is designed to achieve the exact opposite. With due respect, this is the sort of doublespeak you would expect to hear at a marketing seminar.

What this government is asking the telecommunications industry to believe is that a legislative package headlined by a broadband tax should be seen as a gift to improve competition. While it may be inconvenient to concede, the primary reason the government instigated the levy was to deter TPG from cherrypicking inner city basements given the negative impact this would have on the economics of the NBN. Most of the industry, including Labor, support that objective. Labor has always been up front about that; we do believe it is in the interests of taxpayers and in the public's interest yet, from the outset, the government has been too insecure to acknowledge this as an objective of their policy. Instead, to give the appearance of having a more neutral purpose, the levy was expanded into greenfield networks. The greenfield networks don't cause revenue leakage to NBN and if it wasn't for operators such as OptiComm, peak funding for the NBN build would be higher. Think about it: if private operators were not building fibre networks in these areas, NBN would have had to draw on more taxpayer funding to do so. How do a supposed pro-market, pro-investment Liberal Party reward these operators? They reward them with a tax on their operations and on their customers.

This levy was also extended to enterprise markets. Not only is there no revenue leakage to NBN Co, but we have a situation where NBN Co often causes revenue leakage to the incumbent. This was captured very well in a submission by Optus, which noted:

… the provision of services to enterprise and government customers over non-NBN networks does not displace any NBN Co revenue or preclude NBN Co from making sufficient revenue from its metro connections to internally cross-subsidy the fixed wireless and satellite networks.

Notwithstanding various concerns, Labor focused on introducing a legislative amendment to help grandfather existing greenfield networks built before 1 July 2019 until the policy could be revisited at a later time. We did not consider the retrospective application of the levy to be fair, as greenfield networks in newly developed estates did not pass the test of causing revenue leakage to the NBN Co.

I want to run through Labor's position on the bills. We are going to support the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019. It's a sensible piece of legislation. We're going to introduce an amendment to require the levy modelling to be updated and a report to be produced within 150 days. (Time expired)