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Monday, 15 November 2010
Page: 2423

Mr RAMSEY (8:31 PM) —I rise to fully support the National Broadband Network Financial Transparency Bill 2010, which will require the government to prepare and publish a business case and a cost benefit analysis of the proposed National Broadband Network. The bill will allow for the application of some long overdue rigour and analysis of the assumptions behind the biggest-ever single project expenditure in the nation’s history. It is simply staggering that the government and the minister would be prepared to spend up to $43 billion of taxpayer funds without considering options or trying to quantify the benefits to the community.

The bill comes with impeccable timing, with information from the OECD advising the government to abandon the National Broadband Network government monopoly, because it locks out competition to fibre, and to put the NBN through a rigorous cost-benefit analysis, along with all big infrastructure projects. The OECD concerns echo the coalition’s: value for money, appropriateness of the system, the locking out of competitors and competing technologies, what a reasonable rate of return would be on capital and linked inextricably with the likely value of the network once it is established. I am particularly concerned about how my constituency in regional Australia will be affected. While the government now says it will focus on regional Australia, an examination of the detail of the proposed rollout shows the patchiness of the planned coverage with many towns and communities set to miss out on the fibre-optic network. And I would point out that a town like Streaky Bay, with a population in excess of 1,500, is not designated to join to the fibre.

It is worth recapping how we arrived at this place. You may recall a time in 2007 when Australia had a telco, Telstra, which was ready to roll out a new high-speed service to urban Australia at the company’s cost. The coalition government had committed to a wireless network to deliver speeds of 12 megabytes with the taxpayer paying just $958 million. The contracts were signed and OPEL was to match that. The Labor Party was not happy with this deal and promised to build a 12 megabytes fibre-to-the node network to 98 per cent of Australians. In the end that deal collapsed. After 18 torturous months, they then proclaimed—without even blushing—that failure as an outstanding success and committed the government to a $43 billion fibre-to-the-house network for 90 per cent of Australians. Had they learnt anything? Had they consulted industry? Had they commissioned a business case? Was anyone from private industry interested in a financial partnership? Not a bit. This was classic shoot from the hip to defuse a political problem of the day with no plan for implementation. It is worth remembering there are no more potential customers for the $43 billion project than the $10 billion model, and industry could not make the sums stack up on that. So here we are today with the government so committed to its rhetoric, so embarrassed by its failure to deliver on a wide range of policy areas, that it is determined to push ahead with a project that may yet be the biggest waste of public funds ever—even overshadowing the abysmal BER school halls project.

When the government spends money it does not spend its own money; it is spending taxpayers’ money and it is morally bound to make sure the money is being well spent—that the mechanics, building workers, shop assistants and nurses who pay tax are getting value for money and the services they need. The problem with this network is that we simply do not know that, and that is because the government has not been prepared to take due diligence on this project.

If we are to spend $43 billion, either that network will need to supply an adequate return on capital or we will need to accept the investment as taxpayer write-off. We have no real idea what the pricing structure for access is likely to be but we can be sure that the more expensive the service, the lower the take-up—and the lower the take-up the higher the price will be for the service. In effect, this process is self-defeating and it is inevitable. The other alternative I mentioned is simply for the taxpayer to write off the investment. The government has said that sometime after the NBN’s establishment it intends to sell off the network to a private operator. The question then will be: what will it be worth? It can only be worth what someone is prepared to pay and they will only pay an amount determined by the earnings. We cannot responsibly build this network without taking true regard for its worth and benefit. The government should immediately commission a cost-benefit analysis and I fully endorse this bill.