Mary Fisher (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to take note of the fourth interim report of the Senate Select Committee on the National Broadband Network and in doing so note that earlier on today the final report of the committee was tabled. The coalition is on record as saying that the government’s $43 billion National Broadband Network ought to be scrapped. Of course, the government, in that process, is attempting to paint the coalition as effectively being in National Broadband Network denial. We ask questions and we seek justification which we do not get; therefore, we are somehow NBN sceptics. Of course everybody wants better access to better and more affordable broadband and accompanying services, but what the coalition believes Australians will find that what they do not get that—and will therefore not want it—in Kevin Rudd’s $43 billion National Broadband Network. It is Kevin Rudd’s solution or it is the highway—it is ‘my way or the highway’.

All that the government has presented in justification of its $43 billion National Broadband Network is a $25 million taxpayer funded implementation study that says that, based on certain assumptions, the National Broadband Network can be built. But the question begged by the $25 million implementation study is: should it be built in the way the government says it will be? Should it be built? That is the question that should be answered by a cost-benefit analysis, which the government has steadfastly refused to do.

We got some pretty interesting answers during the Senate committee process about why there was no cost-benefit analysis. Mr Quinlivan, from the relevant department, pointed out very succinctly that the purpose of the implementation study is to work out the ‘how to’ of the National Broadband Network. What this does not even go near, he said, is exploring whether or not there is a case for building the National Broadband Network in the first place. At the committee hearing I asked Mr Quinlivan why McKinsey was not asked in the implementation study to perform a cost-benefit analysis. He gave a good, frank answer. He said that McKinsey was not asked to provide a cost-benefit analysis:

Because the government—

said Mr Quinlivan—

… had made a policy decision already.

They had already decided. He went on to say:

The purpose of the cost-benefit analysis is to determine whether there is a case for doing something or not.

But the government, he said, had made that decision. It was an election commitment, so the practical issue, he said, was to work out how best to implement it and that was the subject of the implementation study—by its very nature it is an implementation study. Tragically and sadly, that is right, and the only reason we do not have a cost-benefit analysis to show that the $43 billion taxpayer spend on the National Broadband Network should be spent is that the government had already decided it was going to do it.

But is that the only reason? In addition the Senate committee was told that it would be very challenging to perform a cost-benefit analysis, because part of performing a cost-benefit analysis, should this thing be built, involves looking at comparisons overseas, and for that you need some sort of comparator. Minister Conroy is on the record being very proud of this being a world first. Of course, it is somewhat difficult to rank a world first against others in the world. However, it is not good enough to say it is too challenging and too hard to do a cost-benefit analysis and that that is the large part of the reason we are not even doing one. How is it that saying it is too hard to prove that something should be done can be used as justification for proof that that thing should in fact be done? It is a vicious circle, chasing one’s tail, a tail which this government seems hell-bent on chasing, not only in the national broadband network but also in other policy areas.

We have an implementation study that makes certain assumptions, as I said, and based on those certain assumptions concludes that the National Broadband Network can be built. What of those assumptions? It assumes, for example, that the NBN project will return rates ranging from some three per cent to some eight per cent depending upon reliability of projected take-up and whether or not there is a cost blow-out. In the words of one witness, it may return an eight per cent profit if ‘all things go swimmingly’. McKinsey and Company concluded that a profit of around six per cent was a reasonable guesstimate. In that process, the implementation study by McKinsey and Company is properly subject to much criticism for using the structure of an internal rate of return upon which to base projections of profit—an internal rate of return rather than a weighted average capital cost, which would be more usual, as pointed out by the ACCC overnight, in projects of this nature.

Instead we are left to speculate. Because the public does not know the assumptions and the figures underpinning the implementation study, we are left to conjecture, and the conjecture is that in order to avoid it being said that the National Broadband Network could possibly deliver a negative net present value—because that would sink it overnight for this government and this government knows it—an internal rate of return model allows creative accounting because it allows the determination of the internal rate of return which the government has decided, in partnership with McKinsey and Company, will be some six per cent. If one budgets, as the implementation study has done, on a very modest return pretty much equivalent to the government bond rate of six per cent then it cannot be said that based on that the NBN will result in a negative net present value.

Of course, we still do not know what the net present value of the NBN will be, because the implementation study does not do that, but it tries to make clear that it will not be negative but we can expect a six per cent profit. That goes to the next logical consequence—the government expects private sector investment over time in the NBN Co. What private sector investor in his or her right mind would invest in a project with the inherent risks of the NBN for a mere six per cent return? You would be better off just leaving your money at the bank, but that is what we are left with from the government’s implementation study.

The government sought submissions from the public and stakeholders on its implementation study by the end of May, yet we are still waiting for the government’s response to the implementation study and what the government is going to do as a result of it. As I said, we have no cost-benefit analysis, no demonstration of whether this thing that sounds good will do any good. Will it be any good? There is no demonstration of that and when we said to NBN Co at Senate estimates: ‘You have a business case in the process of iteration with the government; can we see it please? Can we see NBN Co’s business case?’ Minister Conroy jumped in, as he is wont to do, and said—in my words—‘No, you can’t have it today, you can’t have it tomorrow, you can’t ever have it. You will never have NBN Co’s business case.’ Thanks very much, Minister, $43 billion of taxpayers’ spend and Australian taxpayers will never, ever see NBN Co’s business case. On that basis, unfortunately, the coalition continues to believe that Australians do deserve access to better and more affordable broadband services, but Kevin Rudd’s way is not the way. I seek leave to continue my remarks later.

Leave granted; debate adjourned.