Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Chair of the Senate Select Committee on the National Broadband Network, Senator Ian Macdonald, I present the final report of the committee on the National Broadband Network, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

by leave—I move:

That the Senate take note of the report.

I seek leave to continue my remarks later.

Leave granted.

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

This is the final report of the Senate Select Committee on the National Broadband Network, which was set up shortly before I arrived here. In the months between the coalition losing the 2007 election and then losing absolute control of the numbers in the Senate, they established a number of select committees in order to prosecute a number of issues including this one, the National Broadband Network.

We have had quite a number of iterations of the report and I think, on balance, this is a committee that has done a deal of valuable work. Some of the work has been highly politicised, as this issue obviously is, and that unfortunately has infected some of the work of the committee, but on balance I think everybody who participated in it would agree that it has been a valuable experience. We have taken a lot of evidence over nearly two years from the industry, from community groups and from consumer groups, and that has brought us to where we are today.

I will briefly touch on some of the additional comments the Australian Greens made, which have been published in the report tabled today. Maybe unlike some of the past reports, the final report represents quite a balanced summary of the evidence we heard. We did not have a great deal of time—the extension of time was really only for a month or so—but essentially we set ourselves the task of analysing and critiquing the $25 million consultants’ report into the implementation study. We are actually quite comfortable with the majority’s sole recommendation concerning the public release of the underlying assumptions and calculations that resulted in the implementation study. That is a $25 million piece of work that the government commissioned. It is the only quasi-independent assessment of the business case for the National Broadband Network or for the colossal public investment in the NBN, so we fought quite hard for—and the Senate requested—the minister to put that implementation study into the public domain. For quite a period of time it was not clear whether the minister even intended to table that document, so it was with some relief that we got it. Of course, that tabling occurred on the eve of the last report of this committee, so we supported the extension of time.

We made it quite clear in the committee’s previous reports that we do not subscribe to a view that a cost-benefit analysis will result in an unequivocal answer about the value of the government’s plans for the NBN. It is a bit alarming to see the coalition’s entire case in one sense hinging on the ability of the government or perhaps some consultants, some economists, to conduct a cost-benefit analysis. I think the coalition believes that perhaps this will provide us with a sense of certainty as to whether or not the government’s proposal is going to be value for money. Of course, it will not do any such thing.

But, as our additional comments outline, why not? We had Professor Henry Ergas in the hearings in Canberra a couple of weeks ago tell us it would probably be three days work if he was given the underlying data that was commissioned and put to McKinsey KPMG, the consultants. Then they could probably knock together a cost-benefit analysis within a period of three days, at which point I figure: knock yourself out; let us go ahead and do that as long as the underlying assumptions are transparent and are put into the public domain so that we can see areas of certainty and areas of complete guesswork. In a cost-benefit analysis of a proposal such as this, which involves enormous public investment, some of the costs are relatively easy to define, but estimating and monetising the public benefits or the public good of bringing rapid broadband to virtually the entire country, I would argue, are extraordinarily difficult to estimate and then monetise. If you go to the trouble of doing that work and then come across the final dollar figure that says this is what the NBN will be worth, you would want to be very careful about how much reliance you put and how much you rest your argument and your case on whatever number fell out of that analysis.

In our contributions to the committee’s previous reports, we raised the issue of the geographic and socioeconomic digital divide and the importance of building bridges across that divide. During the most recent round of submissions and hearings, some very interesting comment was made on the ubiquity of online services, which is of course relevant to this issue. We are hearing quite similar things in the Joint Select Committee on Cyber-Safety about the ubiquity of social networking, particularly as it applies to young people, and that these systems already are gaining the status of an essential service, certainly in some parts of the country and in some subcultures.

According to ACCAN—the consumer protection network that was established by the Australian government—in the context of endorsing the implementation study’s recommendation relating to the universal service obligation and that that be reviewed, we are already well on our way towards ubiquity. It pointed out that online services were already a practical necessity in everyday life because there are so many basic transactions that are exclusively or preferentially performed online. Access to the internet is already a matter of social inclusion. We are going to see, as this debate progresses, as the NBN rolls out and as services become more and more ubiquitous, that being used as an argument for closing public libraries, for closing postal services, for taking free-to-air broadcasters offline and so on. As services move into the online environment, that sense of ubiquity is going to become more and more important, given that somewhat more than 20 per cent of Australian households do not have a computer. We are not even talking about what kind of connection speeds they have; they do not have a computer. We should not necessarily be forcing people to receive government services and entertainment, health care, education and so on through a system unless we are certain that we have brought everybody with us.

The NT Minister for Information, Communications and Technology Policy urged the government to pursue ubiquity to make the NBN a truly visionary and transformational national building initiative. In that case, they cautioned against the implementation study’s cost-saving recommendation that premises only be connected to the NBN on demand. Their comment was:

The fundamental value proposition of the NBN is not so much its speed, although that is important, but its potential ubiquity to connect 25-30 per cent of homes that are not internet connected and enable a whole range of services including some government services to be delivered to householders regardless of whether they have subscribed to retail broadband service or not.

Speaking to some of the local government authorities who were in the building yesterday from the Pilbara, Port Hedland and from the Shire of Roebourne, their communities, which are some of the most important economic powerhouses in the country, are still getting by on dial-up and still getting by on wireless and that services to some of these townships, which are large and quite substantial, are still basically substandard. These are economies and regional communities that are going to desperately need to diversify their economies to reduce their reliance on mining, oil and gas, and non-renewable resources. The Australian Greens believe that providing ubiquitous rapid telecommunications services is one quite important way of doing that because it links people not just to the rest of the Australian economy and to Australian society but to the rest of the planet as well.

We need to be very careful about how we move forward. Unfortunately, we have not had as much time as I probably would have liked in the work of this committee to discuss that end-user side of what people would—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

You could always have an extension of time.

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

I am not taking that interjection—actually do with these services if they were provided. We focused mostly on competition aspects rather than the end-user aspects. In closing, I would like to thank everybody who worked on this committee. It has been really quite an enjoyable piece of work. We have met some of the best minds in the country pursuing telecommunications issues from a corporate side, research, social policy, and from the end-users side. It is a really exciting time in Australia to be working in this field. There is a lot going on. I think we may have disagreed with some of our colleagues at different times on some of the recommendations, but I think we would all agree that the work has been valuable and that we have rested and relied very heavily on the work of our former chair, Senator Fisher, who is just leaving the chamber, and our current chair, Senator Macdonald, who I think has carried the work forward in style. But, as usual, we could not have done it without the brilliant and diligent supporting work of the secretariat and the staff, beginning with Ms Alison Kelly and now Dr Ian Holland. I would like to put, from the Australian Greens perspective, our thanks to all the work that goes on behind the scenes.

This is really a story only half written. We are winding up this committee, and it is with a sense of regret and profound relief that we are winding it up, but really this is a story that is only just beginning because the NBN rollout is still in the balance. It has become highly politicised. There is not consensus within this parliament or, indeed, within the community that it is a good idea. The Australian Greens will be watching this process very closely. We believe it is a proper role of this chamber to investigate these issues and the consequences of such a colossal spend of public funds, and at all times we will be pursuing the public interest.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

At the beginning of my contribution, and as the current and final chairman of the Senate Select Committee on the National Broadband Network, I want to particularly thank my colleagues on the committee and the first chairman, Senator Mary Jo Fisher, who, as Senator Ludlam has rightly said, did put a certain style and a certain expertise into the work of this committee. It was a committee that was blessed by having, apart from myself, committee members who really understood the issues and contributed some real expertise and understanding to the debate. As well as Senator Mary Jo Fisher, I also want to mention Senator Kate Lundy, Senator Scott Ludlam, Senator Fiona Nash—the deputy chair—Senator Simon Birmingham and Senator Glenn Sterle, all of whom made a very significant contribution to the quite detailed and lengthy work of this committee.

I also want to comment on and thank particularly the secretariat staff who have assisted the committee very substantially over the term of the committee’s existence—the secretaries, originally Alison Kelly and Stephen Palethorpe and currently Dr Ian Holland; and the support staff, currently Ms Fiona Roughley, the principal research officer, and Ms Christina Tieu. We are very fortunate to have Ms Roughley, who has some expertise in this area and also legal expertise—coming to us with a very significant legal background. The help given by all of the secretariat staff was particularly useful.

I highlight that, in its final report, the committee again confirms its view that the Rudd government should scrap this $43 billion project. The whole history of the National Broadband Network has been a fiasco for this government from day one. I will not go through the history—it is all set out in the five reports of this committee. But I think it is telling that answers to questions we placed on notice with the ACCC at our last hearing—answers which came to us only late last night—make it clear that the ACCC has cast doubt on the government’s method of financing the NBN, and that casts even further doubt on whether the NBN would ever be built. Using the most diplomatic language possible, the ACCC said:

The internal rate of the return of a project or a firm is a different concept to the regulatory weighted average cost of capital and is not a concept that has been accepted by the ACCC in making its regulatory decisions.

The ACCC went on to say that financing arrangements could adversely affect competition in the internet industry, saying:

NBN Co.’s financing arrangements could potentially have implications for competition in markets in which NBN Co. operates as well as downstream markets.

It is clear that the 27 full-time employees of the ACCC who have been working on this NBN project have very serious concerns about the methodology used in the NBN implementation study and the consequences for competition in Australia.

I think Senator Ludlam was balanced in his description of the evidence we heard throughout our inquiry. Some people who gave evidence were wildly in favour of this project, but I have to say that my calculation is that most of the witnesses expressed the sort of concern that the committee has ended up reporting on. Certainly Australia needs a national high-speed broadband network. But whether this model is the right one is the question that has been the subject of this inquiry and particularly the last couple of reports of this committee.

The report is there for everyone to read, but there are very severe doubts that this project will ever reach fruition. There are serious doubts about its financial efficacy. There are very serious concerns that the optimism expressed by the Minister for Broadband, Communications and the Digital Economy and the Prime Minister in saying that this broadband network would become a commercial enterprise and would pay its own way is not justified—and that was pointed out in the various hearings of the committee and in the committee’s reports. The implementation study, for which Australian taxpayers paid $25 million, was done halfway through the rollout of the NBN. Of course, any reasonable person would understand that it should have been done at the beginning of the process.

There has not been a cost-benefit analysis. Why will the government not do it? We were told at our last hearings that, following the implementation study, all of the information and detail necessary to do a cost-benefit analysis was there and that all that had to be done was for Treasury or Finance to feed that information into their models and you would have a cost-benefit analysis within a few days, we were told. And if the government for some reason did not want the Department of Finance and Administration and the Treasury—with all their resources—to do it, a very significant Australian economist, Dr Ergas, said that he would do it for free and that it would take only a few days to do. Why would the government not take up that very generous offer—unless it had something to hide? I think it is quite clear that the government does not want a cost-benefit analysis because it knows that it will not stack up.

We learnt in the committee hearing and at estimates that NBN Co. in Tasmania—currently rolling out and to be officially launched on 1 July, in a few days time—is actually giving away its services on the network to the retail service providers so that they can compete with the existing networks. How good a competition is that? We learnt at estimates that all NBN were charging—and it is really not money going to them—was $300 to fix-in the box in every premises and that NBN was not going to charge anything for its network for a period of time. It is clear to me that unless the government succeeds in destroying Telstra and other retail service providers NBN Co. simply cannot compete at a cost of $43 billion—and that is the problem.

The committee believes that a network certainly is needed but that there are better ways of doing it. As an aside, if the OPEL contract which was signed way back in 2007 had gone ahead, most of Australia would currently have that fast broadband network. But Senator Conroy and the Rudd government capriciously cancelled that contract—I think, only because it was not their idea—and came up with this $4.7 billion contract, spent $20 million doing a request for tender process and then worked out that what they were talking about was all rubbish. They cancelled that and came up with the great idea of spending $43 billion of taxpayers’ money on this network, which nobody believes will operate commercially and which will continue to be a drain on the taxpayer for many years to come.

We have not been given any of the information we needed to look at the proper financing of this. NBN Co. is going ahead with the rollout even before it has received the implementation study. The whole process is typical of the Rudd government’s mismanagement and inability to properly run anything they touch, and I fear that the NBN process will end up in disaster and tears.

This final report and all the previous reports are useful contributions to this very complex debate. I recommend all of the reports to anyone at all interested and I conclude by thanking, particularly, the secretariat staff and my colleagues. (Time expired)

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I also am very pleased to speak to this report and to draw the Senate’s attention to the government senators’ report, which my colleague Senator Sterle and I prepared. I would like to begin by acknowledging also the hard work of the secretariat and thanking the witnesses who appeared, in many cases on multiple occasions, before the various iterations of the Senate Select Committee on the National Broadband Network. Many of those witnesses were prevailed upon again and again, given that every time something changed in the broadband landscape the Senate select committee would determine to revisit all of the issues.

This committee was constructed as a Senate select committee, with the opposition in full control prior to the coalition losing their control of the Senate. Labor has consistently expressed concern about that and has opposed the references on the basis that Labor felt strongly that the longstanding Senate Standing Committee on Environment, Communications and the Arts—initially the combined committee and later, when the committee separated to legislation and references, the references committee—was a suitable location. Given that there is legislation before the Senate, all of the legislation inquiries would have dealt amply with the range of issues that we have explored over many months within the Senate select committee.

Nonetheless, I and Labor have participated fully and enthusiastically through the course of this inquiry because of course it is an incredibly important issue for the nation. Whether or not they have expressed a view about the specific government model for a national broadband network, the sentiment of the vast majority of people who have appeared before the inquiry is clear—that is, Australia is best served by a high-bandwidth network that is universally available across our cities, across our regions, in our country towns and in our remote, rural and isolated areas. This is critical economic infrastructure for our future. We do not need to look too far in comparable countries around the world where high-bandwidth networks have been invested to see the benefits that come economically, socially and indeed culturally. Labor watched the coalition founder for 11 or 12 years as they played with telecommunications policy to the detriment of the interests of all Australians. We learnt from their mistakes, and that is why we were able to present such a comprehensive vision for a national broadband network that systematically addressed all of the flaws and all of the issues that were preventing Australia from creating an environment whereby this investment would occur.

There are a couple of key features of the national broadband network that are worth emphasising. First of all of course is its universal high bandwidth. Fibre-to-the-home technology is the primary technology for delivery of this. Our policy was 90 per cent. The implementation study says it is potentially up to 93 per cent, with the rest being backed in by wireless, terrestrial and satellite services with a guaranteed 12 megabits per second—so, guaranteed up to 100 megabits per second for fibre to the home and 12 megabits per second for the rest. This is the best in the world. Coupled with not just this aspiration but this vision for a high-bandwidth network was the structure proposed: a wholesale-only, open access, fibre-to-the-home network is the correct model. It is a model that addresses industry structure, provides for a highly competitive regime at the retail service provider end and, most importantly, given our experience with gaming in the regulatory area of telecommunications, is independently regulated by the ACCC.

I would just like to take Senator Macdonald to task for citing statements by the ACCC, no doubt out of context. Any statement or anything expressed by the ACCC at this point is worthy and it is interesting, because they will be the regulator. So any view put forward by the ACCC at this point needs to be seen in the context that they are the independent regulator. This is not the government setting the regulations in place for the operation of this network; it is the government assigning that responsibility to the ACCC.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Did you read their answers?

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I have not seen the evidence, Senator Macdonald, if these questions came back late last night. But I can assure you and all those opposite that, with the ACCC as the independent regulator of access to this network and all of the associated regulatory issues, that gives us confidence that it is the right model, the right structure. The ACCC will take care to ensure that it is a genuinely competitive regime and that the regulations are not gamed and that will be backed up by an appropriate structure with a wholesale only, open access, fibre-to-the home national broadband network.

I cannot tell you how proud I am of this policy. It puts in place the foundations that countries around the world are still struggling with. You do not need to look further than some of the countries in Europe, which cannot quite grasp the combination of the regulatory regime with industry structure and which will continue to have digital haves and have-nots. Because of the National Broadband Network policy, Australia is the only country in the world that can proceed with confidence, and say, ‘We can close the digital divide.’

Unfortunately, the coalition, for whatever reason, have recently determined they will not support the National Broadband Network. I am flabbergasted by this. I think it shows an appalling sense of political opportunism. It is a political strategy that has well and truly backfired on the coalition, because they decided through this inquiry—and there have been, I think, four interim reports and now a final report—to place all their eggs in the implementation study basket. Many of the extensions to this committee inquiry were on the back of the need for an assessment of the implementation study. The coalition placed all of their eggs in the basket of the implementation study, saying: ‘This will be the ultimate test.’ I can imagine how devastated they were when the implementation study reported back to all—and, as we know, was released by the Minister for Broadband, Communications and the Digital Economy—that not only was the National Broadband Network financially viable but it was financially viable in a way that delivered affordable and competitive services to the vast majority of users on the network.

We saw a sort of quick twostep by the coalition, as they shuffled around and started talking about a cost-benefit analysis, when the implementation study did not provide them with the political foundation to proceed with opposition to this visionary policy. Now we hear that the cost-benefit analysis is in fact the key. I note with interest that, at our recent hearing, Dr Ergas offered to do a cost-benefit analysis, which is very helpful of him, given that he has probably already done one either for Telstra or indeed for one of his former clients, the Liberal Party.

I do not believe there is genuine opposition to this policy anywhere in Australia. I think we are seeing a contrived opposition on behalf of the coalition and the opposition parties in this place, because they still do not know where to go. I find it incredibly disappointing. I would like to encourage those opposite to consider accurately all the evidence that we have heard, to at least have the good grace and share the insight into the needs of all Australians and join with us in espousing a vision for this country of  a high bandwidth network for all. Play the politics all you like but share the vision, because that is what this country needs the most.

The debates of the previous government were all about raising the bar. Who is best able to deliver a universal high bandwidth network? Suddenly, on the eve of an election in 2010 we have a major difference. One party is arguing for no national broadband network and the government is arguing for not only a national broadband network but one that will deliver a high bandwidth universal service and will close that divide once and for all.

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

I rise to speak on the final report of the Senate Select Committee on the National Broadband Network. Senator Lundy suggested that what is required is vision. Indeed, what is required is vision but not vision alone. We require vision with some value, Senator Lundy. The government is continuing to fail to display any sort of empirical evidence to back its—

Debate interrupted.