Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I move opposition amendment (1) to the Communications Legislation Amendment (Deregulation and Other Measures) Bill 2015 on sheet 7844:

(1) Page 5 (after line 25), after Schedule 1, insert:

Schedule 1A—NBN Co Reporting

National Broadband Network Companies Act 2011

1 After section 98A

  Insert:

98AA Financial and deployment forecasts report

(1) The Board must prepare a report setting out NBN Co's financial and deployment forecasts for the period beginning on 1 July 2015 and ending on 30 June 2022.

(2) The report must include:

  (a) forecasts for each financial year during the period of the following:

     (i) number of premises ready for service for each access technology;

     (ii) number of premises activated for each access technology;

     (iii) total revenue;

     (iv) total operating expenditure;

     (v) earnings before interest, taxes, depreciation and amortisation;

     (vi) earnings before interest, taxes, depreciation and amortisation margin;

     (vii) operating profit before deduction of interest and income taxes;

     (viii) net cash interest (funding costs);

     (ix) earnings before taxes;

     (x) total capital expenditure;

     (xi) movement in working capital;

     (xii) cash tax;

     (xiii) levered free cash flow;

     (xiv) government funding;

     (xv) debt funding;

     (xvi) total funding; and

(b) totals for the whole of the period for each forecast mentioned in paragraph (a).

(3) The Board must, within 60 days of the day on which this item commences:

  (a) give the Minister the report; and

  (b) publish the report on NBN Co's website.

(4) The Minister must cause a copy of the report to be tabled in each House of the Parliament within 5 sitting days of receiving it.

I am always grateful to listen to contributions from Senator Smith, as someone who worked in the telecommunications sector. As someone who campaigned for the deregulation and structural separation of Telstra, for him to make a contribution is always valuable. He took the time to read out a whole list—a litany—of failures of the National Broadband Network previously, in his words.

There is a reason he has been able to do that. It is because the previous Labor government made available to everybody in Australia all the information that Senator Smith drew upon. All of the claims of failure to meet targets, of failure to do this or that, arose because the Labor government provided the information that the Australian public were able to assess.

This government, however, after claiming that the NBN was more secretive than the Kremlin—I know Senator Ludlam will remember that—has actually put the Kremlin to shame. This is a government that treats the Senate with contempt. It treats the Senate committees with contempt. It treats Senate estimates with contempt. In fact, officials from nbn co were so bad in their evidence to the recent Senate committee that even the Liberal chair of the committee chided the CEO because they had been so unable to answer any of the questions. He actually asked the CEO to bring to the Senate the officers that the senators had requested, rather than taking the arrogant view that they could answer all the questions. After the first couple of hours of questions endlessly being taken on notice and described as commercial in confidence, even the Liberal chair of the committee said, 'Enough is enough—Mr Morrow, please bring officers to the Senate estimates so they can ask questions and get answers.'

Then we have the issue around commercial in confidence. Let me tell you what a farce this government is in its paranoid desire to hide the true state of the National Broadband Network's rollout and costings. I actually asked a question whether or not a following press release from a company hired by nbn co to do its construction was true. I read out the announcement and the size of the contract that the company had won from the National Broadband Network. The chief executive, Mr Morrow, said, 'I can't confirm that that press release by the company who we have just hired is true,' even though they were required by law to declare it to the Stock Exchange in this country, because it is a material amount. Mr Morrow, in treating this chamber—senators from all parties—with contempt, said, 'I can't confirm that the size and the value of that contract is as has been announced by the company, because it is commercial-in-confidence.' I ask the question: how on earth can something be commercial in confidence if the company is required by the Stock Exchange to announce it?

This farce has now reached a level where the minister is complicit in hiding from the Australian public every single piece of key information on the National Broadband Network. You would have thought at the beginning that there might have been a reason. But what has actually happened is a $15 billion blow-out in the costs of the National Broadband Network, entirely in the hands of the minister and the current Prime Minister. Mr Morrow has confessed publicly that the $15 billion of cost blow-outs is entirely because of changes that they have made to the National Broadband Network. When asked to explain what those cost breakdowns were, we were told it is all commercial-in-confidence. There is no other government business enterprise in this country that gets away with refusing to reveal information like, 'What is the value of a contract that you have entered into with another company?' They hide it all because they are afraid that the truth of the debacle that is unfolding behind the scenes will come to light.

The fact is that the HFC network is way behind schedule and they have no idea how they are going to meet the promised targets, so they hide the truth. They will not come and discuss it with the parliament of Australia, with the people of Australia. But no-one should be under any illusions that that is why we are moving this amendment again today, and, if we have the opportunity to move amendments to relevant legislation again, we will do so, because this government is covering up its failures, it is covering up its cost blow-outs and it is covering up its rollout debacle, which has not met the targets that the company set for it when it did its strategic review. In fact, it is millions of homes behind where the strategic review said it would be. That is no great surprise, given the man personally installed by the minister, Mr Rousselot, a business partner and a joint yacht-owning mate with Mr Turnbull, is getting paid over $1 million. He got a performance bonus when he missed the financial target of the company, in terms of its costs, by $15 billion. He wrote a report that missed the target by $15 billion and he got a performance bonus—seriously! But I do not even mind that scandal.

The fact that this government continues to hide basic cost information is why we are here having this debate. I am sure we will hear a lot of other points made, but no-one should misunderstand that the NBN, behind the scenes, is a debacle. No amount of tweets by 60 people in the media unit at nbn co and no amount of fluffy pieces saying Mr Morrow is the most transformational leader in the history of the universe can hide the fact that Mr Malcolm Turnbull and Mr Tony Abbott promised to have the NBN in every Australians' home by the end of 2016. The date it is due for completion has been extended to 2019 and now to 2020. The costs—$29 billion—are now $56 billion and growing. The deceit in the accounting procedures at nbn co go on and on. The sleight of hand, of shifting costs—not used by any other company in the world—onto fibre to the home, is simply so they can pretend there has been a blow-out in costs. In fact, this company have promised the Australian public that, after rolling out a couple of million homes worth of fibre-to-the-home technology, they will not have found a single cost saving in five years. What legendary management! They should be paid more bonuses—but don't worry, they have been. They actually have sat in front of a Senate committee and said, 'Over a 10-year build we will not make a single productivity gain, a cost saving, in this technology.' Put aside that everywhere else in the world is actually making savings, put aside that there is architecture available at the moment, today, as was forecast by previous management, that would dramatically reduce the costs. nbn co cannot afford to admit to the lie of their costing of fibre to the premises. They can tweet and tweet and tweet, and they can do their fluffy interviews, but the lie has to be maintained at all costs, and there will be an accounting for this lie.

There will be an accounting for telling lies to the Australian public about the costs your company is incurring when you know that they are not true. You can keep hiding your figures as long as you want

You can keep burying the truth and hope that no-one inside the company will ever confess. You can keep refusing to let officials come to the table, because you know they might tell the truth. You can sack officials who do actually prove that you can get cost savings. This is a company that sacked a team which delivered substantial cost savings and rollout reductions, and their reward inside the company was to be sacked. The message went out: 'Don't you dare find cost savings.' Ultimately, you will not be able to hide from the truth, Minister.

This amendment would end the farce. This amendment would ensure that the truth about the real costs of the debacle of the change to the multi-technology mix would be revealed, and that is why you will oppose this. You will oppose this because the truth would expose the Prime Minister of Australia to be a complete and utter fraud when it comes to the project—the cost that were forecast, the costs that are currently being incurred and future costs. You would have to front up to this chamber every day in question time and answer questions about what is really going on. For as long as you hide this information, we will keep asking, we will keep going to committees and we will keep seeking amendments until we get the truth about the real costs of Mr Turnbull's broadband network will be.

Put aside the exciting new developments in 5G, which have been talked about over the weekend. I do not necessarily believe everything I have read, particularly from vendors who are trying to sell product into the future, but the 5G network—the mobile network—will make obsolete fibre-to-the-node technology before 2020. Three to four million homes are going to be faced with being locked into a technology which you will have put in place that will be bypassed. 5G was always coming and the substitution effect was known. Those opposite had to admit that they made bloated claims before the last election of how many homes would switch off and go mobile. Tragically, if you look at the statistics, after nearly a million rollouts and take-up rates, that was exactly what was forecast—72 per cent. Then you have to take into account housing stock and places that are not open—there are many reasons that it is not the whole 100 per cent; there was a lot of confusion about that—but the forecast was 72 or 73 per cent. Guess what the take-up rate has been? It is exactly as was forecast.

Let's be very clear: in the future homes locked into fibre to the node will actually be slower than the mooted speeds of mobile technologies. As I said, I do not always believe every claim by a vendor or every claim out of a lab, because the real world is a very different place. Always, at the end of the day, mobile technologies—whether they be HFC or mobile phones or broadband—are shared. When they talk about speeds of gig and more than a gig, always remember it is a shared technology and everybody's individual—(Time expired)

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

I rise to support this amendment, although I suspect it, like other amendments, has caught some people somewhat by surprise. I want to spell out my reasons for supporting the amendment. I wish the amendment were unnecessary, to be quite honest. I have a certain sympathy the Senator Fifield, as the rest of the chamber lined up to say that this bill was largely innocuous and was largely housekeeping measure. He is correct about that, but this is some unfinished business and some unfinished housekeeping which we should not be needing to deal with today.

The amendment that has been circulated requires nbn co to provide 'for the period beginning 1 July 2015 and ending 30 June 2022 forecasts for each financial year during the period of the following information'. I am not going to read the whole thing a couple of the ones that jumped out: the number of premises ready for services for each access technology; the number of premises activated for each access technology; revenue; operating expenditure; cash flow; and net levels of government debt. Why is this information not already in the public domain? Why do these forecasts have to be extracted by the Senate in this fashion? Why does this material not already exist?

Senator Conroy and I and those who have been participating in this debate since 2008 have had plenty of run-ins about the strategy, the performance of nbn co, some of the technology choices, some of the market choices, but the debates were always carried out against the backdrop of information that was being handed over by Mr Quigley and his team. It meant that we were able to compare the forecasts which were being generated by the government or by nbn co, when it only had a handful of staff, against the actuals. When the volume rollout finally began and we finally got a sense of who was taking up the technology, the speed tiers they were taking up, how the network was performing, how long it was taking to rollout, what it was costing per premise, we were able to go back and say, 'These forecasts were wrong and these were reasonably accurate.' At least we were acting on the basis of publicly accessible information. It was not always easy, and I can recall Senator Minchin, when he was shadow communications spokesperson, and the Greens—you can go back to the record if you like and you can find instances where the Senate was tabling orders for production of documents out of Senator Conroy when he was communications minister—but we got there. By the time the volume rollout started, everybody—whether they supported the model of the project or not—could base their arguments on the performance of the network on data and on information.

Let us go back to where this began—to before the election. Mr Abbott instructed his communications spokesperson, Mr Turnbull, to go out and demolish the case for the NBN. They sought to destroy anything that had Labor's name or the Green's name attached to it—the carbon price, the CEFC, the renewable energy agency, the minerals resource rent tax and the NBN. Anything at all that reminded Mr Abbott of the six years of achievement under the former government was to be destroyed—'demolished' was the term that was chosen.

So we had one of the bizarrest press conferences that I have ever seen, with this proposal for a cobbled together, half-baked national broadband network that was going to cost $29½ billion, and instead of future-proofing the country with an end-to-end fibre network we would use a bit of copper, a bit of HFC, some satellites, some wireless towers—we would have this mongrel network big parts of which would be obsolete on the day they are built and will need to be torn up and replaced with the kind of end-to-end fibre network that this parliament legislated for, that got the country Independents, Mr Oakeshott and Mr Windsor, across the line in 2010 to support a minority Gillard government. I am not here to speak for them, but we all know that telecommunications played a very big part not just in the election campaign but in those decisions that in part allowed Ms Gillard to form government in the first place.

They said it would cost $29½ billion. Then came December 2013, and the strategic review says actually it will be $41 billion—'we misunderstood, our election promise was not worth the paper it was printed on; it is going to be $41 billion.' Yet August 2015's corporate plan for 2016 says we are up to $56 billion. How on earth did we get here? We are stuck with an obsolete copper network that you have to scrape the garbage out of when you discover it has been taped together with gaffer tape and plastic bags. We are stuck with a reliance on Telstra, who know where the bodies are buried, and are pretty happy to offload their network, which different spokespeople at different times have said is no longer fit for purpose, back to the taxpayer. The network rollout is way behind schedule. The fibre to the node network is way behind schedule. The satellites are apparently at or approaching capacity. Australians are getting a telecommunications network that will be slower, more expensive and delivered later than an all-fibre build. What act of genius put this together? Who dismantled something that was going to work?

We have had plenty of run-ins in this place about delays and about cost overruns. I think the cost overrun arguments were overblown, and they were not being reflected in the volume rollout data that Mr Quigley was putting to Senate committees. But, yes, the network was delayed—it was delayed by asbestos in the pits, it was delayed by a subcontracting pyramid that was six layers deep in some places, and it was delayed by the inherent complexity of doing something as complex as this—decommissioning a network that is decades old in some parts of the country and not particularly well maintained, and replacing it with an entirely new technology. Yes it was running behind schedule. But instead of coming in and cleaning out the messy subcontracting arrangements that had been put in place and throwing strong parliamentary oversight over the build, the coalition demolished it and now we are left with the mess that we are in today. The Senate has had to come forward with an amendment in this slightly unorthodox manner to ask for basic information so that the debate can proceed at the very least on the basis of data, and then we can have our disagreements about how they are performing.

Personally I think Mr Morrow is playing the best hand he can with a pretty rotten set of cards. Others may well disagree with that but I think he is doing the best he can with the cards he has been dealt. But he has been set up to fail. nbn co has been set up to fail. Now we read—although it is disputed, and Senator Fifield is very welcome to provide some light on this if he likes, because this unfortunately has now passed into his responsibility and I wish him well with it because I think he has been dealt a mess—that apparently there are moves to privatise this shambles, apart from the fact that you wonder where on earth you will find a buyer for a half-a-billion-dollar cobbled together mishmash of a network such as the one you are trying to build. I can well remember the amendments that the Australian Greens put forward when the Labor Party was proposing that there be an automatic assumption that when the build was complete it would be privatised, that when the network was complete it would go back to the market—despite the fact that we had just been through the argument that the wholesale network is a natural monopoly. It is like the freeway network, it is like the water distribution network, it is like the electricity network. You do not want two sets of power lines running down the street as a result of trying to set up some arbitrary form of competition at the wholesale layer. You do not want that in telecommunications networks either. You want the wholesale NBN network in public hands, where the bosses can be brought into estimates committees and cannot hide behind commercial confidentiality, where budgets are tabled, where questions can be asked and answers can be provided, and you want that at the wholesale natural monopoly layer. You want nbn co to stay in that box and to do one thing and do it well. Then you want to let competition rip at the retail layer. I think that the market structure that this parliament decided on after exhausting late-night debates, night after night, was effectively and essentially the right one.

Now we have this proposal that we somehow privatise the network. Who is going to buy it? We all know who is going to buy it—Telstra is going to buy it. So we will be back to the bad old days. They sold this obsolete copper network to the taxpayer and we are going to be handing this whole mess of garbage back to them to fix up. It may be that there are no intentions to privatise the network, and I remind senators who may be a little less familiar with what is in the act, that we removed the Labor Party's automatic assumption of privatisation. That is no longer there, so it would be up to the government of the day to initiate a sale if they chose. That was our first amendment. Our second amendments related to the fact that the Productivity Commission and a parliamentary committee would be stood up to assess whether privatisation is in the public interest. At least we would take evidence as to whether that was the case or not. I am making the case this afternoon that it would strongly not be in the public interest to privatise the network, but we would let the evidence speak for itself. The third safeguard that we placed in the bill was that any proposed sale would be subject to a vote in this parliament, as informed by the PC, as informed by a parliamentary inquiry.

What kind of network is it that this government even proposes to sell? It is a huge loss-making entity at the moment because it is barely even a quarter built, because the rollout is a shambles. Again, this is no disrespect to the people who have been dealt these cards, to Mr Morrow and his team. I genuinely wish them well but they have been set up to fail. The least we can do is not make things worse. Senator Fifield has not had the opportunity to speak on this amendment yet and I am not going to put words in his mouth but I would struggle to understand a justification for not supporting this amendment. As we have our debates about what kind of telecommunications network is fit for purpose, we see Mr Turnbull, Minister Fifield, Mr Wyatt and other spokespeople talking about agility, talking about innovation, talking about a future focus, talking, heaven forbid, about diversifying our economy away from bulk exports of depleting low-value commodities. What better way to underpin these other vitally important parts of our economy than with world-class telecommunications? My home town of Perth is in Beijing's time zone, which stretches all the way to eastern Europe. What better way to connect with the rest of the planet than with world-class telecommunications, and what we have been served up is expected to be blindfolded to the basic data underpinning the projections of this network and how fast they think they can get it built—and it is a network that will be obsolete on the day that it gets switched on. We have to be able to do better than this. So, unorthodox although it may be, this information should be in the public domain, this amendment should pass and then we can all get on with our day.

Mitch Fifield (Victoria, Liberal Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

I thank Senator Ludlam for his contribution. As I have said in this place before in relation to Senator Conroy and his approach to the NBN, Senator Conroy really took a theological approach rather than a technological approach to the NBN. I do not contend that Senator Ludlam is a follower of Senator Conroy. I think Senator Ludlam reaches his own conclusions, but Senator Conroy very much has a theological approach to the issues around the NBN.

We on this side of the chamber on coming into government sought to take what has been acknowledged by some who have contributed to this debate a technology-agnostic approach to the NBN—the objective being to see the NBN rolled out as quickly as possible and at lowest cost, and charging nbn co with the capacity to choose the technological solution that would see that happen. That has been our approach and obviously it is a very different approach to that of the previous government and Senator Conroy.

The essence of the amendment moved by Senator Conroy is that there is not adequate transparency in relation to the NBN and that, by implication, there was great transparency under Labor and sunlight reached wherever it did. Transparency was an illusion under Senator Conroy. There were plenty of pins on rollout maps and lots of very pretty maps on websites with really nice colours. The only problem is that they bore absolutely no resemblance to reality. It was the illusion of transparency.

When then Minister Turnbull took over the project, he told nbn co to provide the government with the unvarnished truth, and that unvarnished truth was not particularly pretty. Nbn co were told not to tell the government what they thought the government wanted to hear. I have a sneaking suspicion—and I hear it from some who were in nbn co at the time of Senator Conroy's stewardship—that that really was the culture in the organisation: 'For goodness sake, don’t convey information that will not be well received by the minister and the government of the day.'

There is an unprecedented amount of information available about the NBN rollout today, including weekly progress reports, quarterly financial updates and a detailed and regularly updated three-year rollout plan which extends to 2018 and, which was released for the first time towards the end of last year. There is the corporate plan which covers the next three years. There is the annual report. There is the statement of intent. There is an unprecedented amount of information available, and it really is in dramatic contrast to the period of Senator Conroy's stewardship.

Something I plead guilty to, for which I get into trouble on this side of the chamber, is a degree of fondness for Senator Conroy. I know it is a radical thing, and I am often chided for it. But I must confess that I do get a little tired of Senator Conroy moving amendments to completely unrelated pieces of legislation, which he is doing in this case. No doubt this will not be the last time that we will see Senator Conroy do this and will not be the last time we see him do it in relation to the NBN. This is essentially an attempt at a legislative stunt.

In Senator Conroy's proposed amendment, he talks about forecasts going out to 2022. The difference between 2022 and the never-never can be negligible. What technology based company would propose forecasts that go out to that period of time? Another concern with the amendments foreshadowed is you have to be very careful when it comes to an organisation like nbn co, which enters multimillion dollar contracts with a range of different organisations that there is no information which could be to the commercial disadvantage of nbn co. It would not be remotely responsible for the government to entertain the amendments that could be to the commercial detriment of nbn co. This amendment has just been circulated. The government will not be supporting it. There is unprecedented information around the NBN.

I should just touch on a point raised by Senator Ludlam in relation to the ownership of nbn co. It is important to remind the chamber that there are certain legislative steps that would need to be gone through for the issue of ownership of nbn co to be examined. Our focus is fairly and squarely on rolling out the NBN. That is what we want to do—get it to Australians as quickly as we possibly can.

There have been a number of false claims over recent weeks and recent months by the shadow minister, Mr Clare. One is those is that Mr Clare said, in a press release:

… Malcolm Turnbull bought back the old copper network … that John Howard sold last century. As part of the same deal he also bought the old HFC network that Optus planned to decommission years ago.

Wrong. Wrong. The fact is that the coalition government did not pay a single dollar more for the copper or HFC assets that were acquired. In June 2011, it was the former Labor government which oversaw binding deals with Telstra for $9 billion and with Optus for $800 million to stop using those networks. So the previous government was paying money to Telstra and Optus to not have something available. The underlying intention was to pay the telcos to migrate their fixed-line customers across to the NBN and stamp out competition, which would have been detrimental to the economics of the rollout. Despite paying these companies to stop using their networks, Labor did not negotiate any rights for nbn co to access or acquire this infrastructure. So the truth in relation to that is the exact opposite of what Mr Clare claimed. I would not be surprised if those opposite have Mr Clare's press release of mid-December with them, to go through and repeat some of its falsehoods.

I have posed to this chamber before—and I will do it again—the question that is often put to me in public forums, and that is: are you more likely to have faith in a technology based plan or program that was devised by Senator Conroy or one that was devised by Mr Turnbull? I have not, it is fair to say, had many people putting up their hand and saying, 'Senator Conroy.' That is a very rare occurrence. But there is no doubt that, under this government, the NBN will be rolled out six to eight years sooner than otherwise would have been the case and at a cost that is billions and billions of dollars less.

We are not taking a theological approach here. We are taking a remorselessly practical approach to the rollout of the NBN because what matters to us and what we know matters to the public is seeing the NBN rolled out as quickly as possible and at the least cost to them. The debate here is not about the desirability of an NBN; the debate here is about who is best placed to successfully roll out the NBN and who is best placed to do it at the lowest cost to the taxpayer. I would contend that that is much, much more likely to happen under the Turnbull plan than under the Conroy plan.

The CHAIRMAN: The question is that Labor amendment (1) on sheet 7844 be agreed to.

Communications Legislation Amendment (Deregulation and Other Measures) Bill 2015, as amended, agreed to; Telecommunications (Numbering Charges) Amendment Bill 2015 agreed to.

Communications Legislation Amendment (Deregulation and Other Measures) Bill 2015 reported with amendments; Telecommunications (Numbering Charges) Amendment Bill 2015 reported without amendments; report adopted.