Mr FLETCHER (7:30 PM) —I rise to speak about the recently released implementation study into the Rudd government’s proposed National Broadband Network. That report reveals the huge financial risk to which this project exposes taxpayers. But it also reveals how the National Broadband Network threatens the longstanding objective of telecommunications policy in Australia, which is to unleash the power of competition to serve the long-term interests of end users. Competition has delivered significant price reductions. According to the ACCC, in the decade to 2008, average real prices for fixed line services fell by 32.3 per cent, but it now seems that the objective of stimulating competition comes second to building the National Broadband Network. NBN Co. is designed to be the monopoly wholesale supplier with all retail companies purchasing services from that company. This has worrying implications for competition and for end users. For one thing, it could mean that people who today take the basic voice service—a monthly line rental of around $30 for Telstra’s most popular home line plus plan—are facing a significant price increase. In fact, the average price is slightly lower than $30; it is around $28.

The implementation study on page 268 proposes a wholesale price for a voice-only service of $25 to $30. When you add on to that the extra costs that a retailer will need to incur—including sales and marketing, billing, switching—this implies a retail cost of at least $35 to $40 a month. There is no convincing explanation in the implementation study of how the existing pricing of basic voice services will be maintained in a world where all retailers are supplied by NBN Co. as the monopoly wholesale provider. So a policy designed to deliver high bandwidth services to all may have a nasty side effect: those who do not want such services may be forced to pay more for the basic services they do want. What is more, the implementation study recommends that the wholesale price charged by NBN Co. should increase every year in real terms. This will feed through into rising retail prices, a sharp reversal of the long-term trend of falling prices shown in the ACCC’s work which I mentioned earlier.

Can we rely upon the government to prevent such price increases? That seems very unlikely, given that the government will be the 100 per cent owner of NBN Co. and will therefore face a severe conflict of interest, because as the owner it will want that company to do well financially and that will conflict with its stated policy objective of stimulating competition in telecommunications. This conflict is not new. It was the desire to resolve such a conflict which was a very significant reason for the Howard government pursuing its policy of privatising Telstra. Now that problem is going to come back again under the Rudd government’s NBN policy. We are already seeing that conflict play out with scope creep and efforts to expand the role of NBN Co. This company was supposed to be wholesale only, but legislation introduced into parliament recently would permit it to serve retail customers if the minister authorises that.

The long-term market structure implications are equally troubling. By establishing NBN Co. as the dominant player in fixed line telecommunications, the Rudd government will make it harder for competition to flourish. New entrants will be very reluctant to take on a company with generous financial support from government and, even if they do, they face another remarkable recommendation in the implementation study, which is that new entrants should be burdened with an additional impost if they do enter—all designed to protect the position of NBN Co. This is not a set of policy approaches which is likely to maintain the current trend of downward retail prices. It is not in the interests of competition and it is not in the interests of end users. It is a regrettable consequence of an ill-thought-through policy and one which will not serve the interests of telecommunications users in Australia.

There are many other aspects of the implementation study which raise similar concerns and Australians are entitled to ask: what is going to be the impact of the National Broadband Network on competition and on pricing for basic services? (Time expired)