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Thursday, 26 May 2011
Page: 4868


Mr HARTSUYKER (Cowper) (16:09): I welcome the opportunity to speak on this matter of public importance. It is interesting to note that, when the Howard government was in power, we had a regime that delivered consistent surpluses year after year. We had a government that had the confidence of the Australian people. We had a government that people believed could deliver efficiently and effectively. But sadly, with the arrival of the Rudd and Gillard governments, there has been a loss of faith by the Australian people in the ability of their federal government both to deliver and to deal with imminent threats to the Australian economy. It is interesting to note that the shadow Treasurer highlighted the fact that it is this government and this Treasurer who present the greatest threat to the Australian economy. They have a complete inability to deal with Australia's economic challenges. On this Treasurer's watch we have seen an economy go from surplus to deficit, the levels of government debt reach record levels and this country plunge into deficit. In typical Labor fashion, this government has increased taxes, spent at record levels, wasted billions of dollars and plunged the country into a record $55 billion deficit. Labor is governing as they always do. They have not delivered a surplus since 1989, and this is simply business as usual for a Labor government.

We hear the Treasurer speak of future surpluses that are just over the horizon—' coming soon to a country near you'—but the reality is that he has not delivered a surplus, and I can tell you, Mr Deputy Speaker, that he will not deliver a surplus, because this government does not have the courage to ease spending, to pay back its debts and to bring the budget back into surplus. It is into tax grabs and debt financing rather than responsible economic management. If this government was fully focused on delivering a surplus, we would not need to increase the gross debt limit to $250 billion. This Treasurer is simply incapable of delivering a surplus that he speaks about in the future. By 2014, the government will be spending $20 million a day on interest payments alone, just to service its debt. This is money that could be going into roads, into schools, into better health services and into services for regional Australia.

One of the interesting risks to the Australian economy is a project that is being trumpeted by this government as the way of the future: the National Broadband Network. The potential for blowouts in costs and increasing burdens for taxpayers because of the National Broadband Network is greater than for any other project undertaken by a government in our history. There are already very bad warning signs—some very imminent threats—relating to the National Broadband Network. It is becoming clear that the NBN will never meet its IRR projections or its revenue projections, that it will be over cost and that it is not going to deliver the sorts of economic boosts that the government claims it will.

Let us go to the interesting point of the project's progress at the moment—the issue of time, which is so very important in the final cost at which this progress project would be delivered. Virtually every element of this project has been delayed. The Tasmanian rollout has been delayed 10 months, the completion of the first mainland sites has been delayed, NBN Co. have indefinitely suspended the tender process for contractors for infrastructure and now we have found that the second release-site stage has also been delayed. The $11 billion deal with Telstra has also been delayed—it is some six months behind schedule.

The NBN Co. is pointing the finger of blame for delays. The blame has been levelled at contractors, at the ACCC and at Telstra. These are all supposed to be reasons that the rollout is behind schedule. NBN Co.'s business case makes it clear that the rollout will have that impact on the project viability and the return.

It is interesting to note that, by 30 June 2012, the rollout is projected to reach 35,000 homes. But 15 months into the rollout, how many homes do we have connected? Instead of the 35,000 homes, do we have 10,000 homes connected? No, we do not have 10,000. Do we have 5,000 homes connected? No, we do not have 5,000. In fact, we have 607 homes connected to the NBN.

Mr Coulton: Seven in Armidale!

Mr HARTSUYKER: 'Seven in Armidale!' the Nationals Chief Whip adds. He is very right—there are seven in Armidale. I will get to Armidale in a minute. So, rather than having reached the target of 35,000 homes in just over 12 months time, we are well on the way: we have 607. Yet 'Trust me,' says Senator Conroy!

You have to look at the take-up, which is another important part about the viability of this project. What have they achieved in Tasmania? Of the 4,000 eligible households, they achieved a 15 per cent take-up. That was when people could receive the project for free. So they came along and spent $50 billion on a project, they gave it away and only got a take-up of 15 per cent amongst eligible households. It is unlike the iPhone when people queued in the snow to get one—they gave it away for free and people still did not take it up. They are 15 months into the rollout and they have 607 customers and 784 staff. I think the minister should make it his No. 1 priority to make the number of staff fewer than the number of customers. It would be a good objective to have a number of customers greater than the number of staff.

It is also interesting to note the Armidale rollout. There was a lot of fanfare and discussion about the first mainland site, only to achieve a take-up of seven customers—the magnificent seven, as I referred to them. I was really pleased that those seven people signed up; it would have been embarrassing if no-one had signed up. One of those customers was Mr Stroud, who signed up because he wanted access games. The NBN enabled Mr Stroud to play World of Warcraft at the highest level. I am pleased that he is pleased, but when you consider that it is a $50 billion project and when you consider the opportunity cost of capital I think it is a real issue for this country that a major part of the demand for broadband services is for recreational services. It seems incredible that we are investing so heavily at a time when the demand drivers that are going to deliver the return on investment for this project cannot be demonstrated. We are paying billions of dollars that could have been spent on other vital infrastructure projects so that Mr Stroud can, to his delight, play World of Warcraft at the highest level. It does raise very serious revenue questions.

We have the IT industry raising questions about the cost and complexity. Why did NBN Co. suspend tender negotiations? There were 14 companies who came in well above budget. What does that say? NBN Co. are trying to say, 'It is not that our budget was wrong and that we underestimated the cost; it is that the contractors got it wrong.' It is interesting that the CEO of one of the 14 tenderers, Mr David Stewart of Leighton Holdings, said on Tuesday in reference to NBN Co.:

… some of the things that people are asking us to do are impossible for us to even price.

What confidence can you have in an organisation that at this early stage has contractors unable to price some of the proposals that are put to them only 15 months into a rollout that will take longer than a decade? Mr Stewart continued:

Often, you find with any new enterprise that is set up as a special purpose vehicle, all the experts decide they can change all the Australian standards, change the contract conditions, change the risk profile and fix up an industry that was probably OK before they started.

This government and NBN Co. have no idea about the price pressures facing the IT industry. They have no idea how to deliver this project on time and on budget. A cost of this magnitude is putting the Australian government budget under significant threat. With the revenue projections likely to fall well under what was expected for this project, the already slim return of seven per cent is absolutely at risk. This is a potential financial disaster that will have to be financed by the taxpayers of this country. It is an imminent threat to getting this government budget back into surplus. It is an imminent threat to the rollout of other infrastructure projects in the future. There will be a diversion of capital from projects that would deliver higher rates of return to one that quite clearly is not going to deliver the rates of return that have been promised.

So under this Treasurer's watch the country has plunged from surplus into deficit. This Treasurer has no notion about putting down a budget that will set this country up for the future. We have a Treasurer who is unfit for the position he holds.