DUYSHART, Mr Bruce, Head, Technology in Property, ICT, Lend Lease

LINDSAY, Mr Richard, Chief Executive Officer, UDIA National

MUSGRAVE, Mr Martin, Policy officer, UDIA Victoria

[12:11]

ACTING CHAIR: Welcome. Although the committee does not require you to give evidence under oath, I advise you that these hearings are formal proceedings of the parliament and warrant the same respect as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attract parliamentary privilege. Mr Lindsay, would you like to make an opening statement to the committee?

Mr Lindsay : Thank you, yes. I will be very brief given the time. UDIA acknowledges that since the original bill was put before the parliament before the last election there have been some significant and positive changes to that. We welcome that—in particular the government's decision to make NBN Co. the fibre provider of last resort. We wish to make the point upfront that in general the development industry is very supportive of the opportunity for improved telecommunications services to be made available to the greenfield sites offered by the NBN. A number of developers across Australia have already undertaken to implement fibre to the premises in their residential developments. UDIA is keen to see the current issues relating to the transition of the new regime for the deployment of fibre to the premises to greenfield sites resolved as soon as possible. In this regard, we welcome the announcement made by the minister on Tuesday which refines the arrangements for the provision of fibre in new developments and hope that these new arrangements will resolve at least some of the issues we raised in our submission relating to the transitional arrangements. However, we note that we will not know the impact of this until it starts to be rolled out in real-life situations.

As outlined in our submission, over the past six months there has been significant uncertainty and confusion for developers in relation to the rollout of fibre in greenfields, particularly due to different and at times conflicting information being provided to the industry by the major providers. We hope that NBN Co. and the government will continue to provide an ongoing dialogue and clarification of issues with the industry in a timely manner and continue to communicate and engage with the industry and also state and local governments throughout the whole transition process. We are happy to take any questions the committee might have.

ACTING CHAIR: Thank you, Mr Lindsay. I note that you refer to the uncertainty that has existed over the past few months or really more than a year now. What is the importance of ensuring that this legislation is passed in a timely way as far as providing certainty in your area?

Mr Lindsay : To take it back a step, the major issue for the development industry in general is certainty. The whole development process can take anywhere from eight to 10 years to roll it through and critical decisions on the viability of that project need to be taken well in advance. Since the NBN issue has been on the table for the last two to 2½ years, the announcement on Tuesday was the third ministerial statement we have had in terms of policy. It has all changed on the way through. So for us the critical thing is certainty. I am not sure that the legislation provides the total certainty that we are after—and that has been outlined in other submissions as well—but we do need certainty. So legislation going through would help to provide some of that certainty. However, as was mentioned by our friends from the HIA, it does not cover off everything.

Mr TURNBULL: My question covers the same thing I have discussed with the HIA earlier. Developers have expressed a number of concerns to us. One is obviously the question of uncertainty and delay, and you have flagged that. Another one is the inequity, as they see it, between developments that will get cabled by NBN, if they involve more than 100 premises, and developments will be coppered by Telstra if they involve fewer than 100 premises, and then presumably cabled at some future date. There is also the question: how long will it take the NBN, being the sole provider, to get around to it?

It has been put to us that a more efficient approach would be as follows: a developer could, if he or she chose, get an appropriately qualified firm to connect all of the premises in their new development, be it large or small, with fibre in accordance with specifications that were laid down by ACMA, in consultation with the NBN and that, if the developer did that, he or she could then require NBN to acquire that fibre from the developer at an agreed price. When I say 'an agreed price,' I mean a price that would be a rate set out either in the legislation or in regulations. The argument is that this would mean a developer could take the matter into his own hands, get on with the job, cable the development in a way that meets all the other construction timetables they have got and would not be disadvantaged financially by doing that. That has been put to us by some organisations that are no doubt members or affiliates or fellow travellers of yours. I want to see what you think about it.

Mr Duyshart : I think our response to that would be that that is a pragmatic suggestion. In relation to the certainty question you asked me before, that is what is confronted by developers—how and when are things actually going to be done? Whatever brings around greater certainty for purchasers of those properties that all the utilities are actually there and are available and can be handed over to them and the greater that certainty is, the better it will be.

Mr TURNBULL: You would welcome an amendment?

Mr Duyshart : That would be a pragmatic approach.

Senator FISHER: Thank you, gentlemen, for your submission. Do you have any concerns about Minister Conroy's comments yesterday in his press release that, where pit and pipe is installed either by NBN Co. or Telstra, depending upon the size of the new development, before NBN Co. will reticulate the pit and pipe the developer has to reach an agreement with NBN Co. that, in the words of the minister, 'transfer ownership of the pit and pipe to NBN Co.' Do you have any concerns or comments about that?

Mr Duyshart : Again, it comes back to the question of certainty. You can understand that for commercial and technical reasons why they wish to have ownership and control of that infrastructure; the same applies to Telstra wanting to do that. The question remains around certainty of delivery at the point of handing it over. For example, if that infrastructure is handed over to either party, the question remains: when will they actually deliver? That is unclear in terms of the contract that is within—

Senator FISHER: When will they actually deliver what?

Mr Duyshart : The fibre infrastructure. It is all about the pit and pipes. So you hand over the pit and pipe infrastructure and give it to them, but it does not bear a relationship directly to the services and when the services will be delivered using the fibre over that infrastructure.

Senator FISHER: Is that the only uncertainty that that proposition delivers?

Mr Duyshart : Mainly. That is the principal reason, yes.

Senator FISHER: What else?

Mr Duyshart : It is the timing and it is the certainty around some of the services.

Senator FISHER: Okay. What about ongoing maintenance of the infrastructure? What would be your expectations there?

Mr Duyshart : That NBN Co. would continue to maintain that infrastructure if they owned it.

Senator FISHER: Do you think that the bill provides in that way?

Mr Duyshart : I do not think that it actually goes to that extent just yet to explain all those finer details. That would be my understanding at this point in time.

Senator FISHER: So what other issues might arise?

Mr Duyshart : There are other issues. It is early days in this, and some of the key things here are that it will not be until these actually get tested and applied out there in the real world that we will begin to discover things as we go along.

Senator FISHER: But you have practical knowledge; you are the head of technology in property. So have you got some practical knowledge of the other effective uncertainties that might unfold—things we do not know because the bill does not say—in that context, in relation to this particular issue?

Mr Duyshart : That is a difficult question to answer.

Senator FISHER: Do you want to take it on notice?

Mr Duyshart : I could take that on notice, yes.

Senator FISHER: Does either of you other gentlemen have anything to add on that issue?

Mr Lindsay : No, we would have to have that on notice.

Senator FISHER: Okay, thanks.

Mr HUSIC: With utility providers—electricity or gas—where the provider is not in a position, because of other workforce commitments, to meet a developer's timetable for the rollout of that infrastructure, am I correct in remembering that the developer can engage subcontractors to be able to roll out that network in a development site? Is that correct? For example, Connect Engineering in New South Wales is one that does that for developers on the electricity side.

Mr Duyshart : I imagine it will vary from location to location. At the end of the day, these infrastructures have to be built to an Australian standard, under codes and so on.

Mr HUSIC: Understood.

Mr Duyshart : It would be whether the utility would be accepting of those conditions, I imagine.

Mr HUSIC: Understood. But, if they set the standard and they have an accredited service provider that is able to roll that out, that is not a foreign concept to the UDIA?

Mr Duyshart : To my understanding, that is not a foreign concept.

Mr HUSIC: When the asset is rolled out and the reticulation occurs, be it electricity or gas, who then owns that asset? Is it the developer or the distributor ultimately?

Mr Duyshart : Ultimately, usually the distributor.

Senator IAN MACDONALD: I have heard that, with developments that have been built or are in the course of being built and that have put in their own quite substantial fibre network within the development, NBN are going to overbuild all of that. Have you heard anything about that, and—because this is an inquiry about the legislation—does this legislation impact on that in any way?

Mr Lindsay : It is not something I have heard.

Mr Duyshart : It would be a commercial decision of the NBN. Whether they decided to do that or not would be known to—

Senator IAN MACDONALD: It has been suggested to me that there is a perfectly good system there but it is not going to be connected up to by NBN; they are going to insist on overbuilding it. That has not come to your notice?

Mr Duyshart : There have been stories, but—

Senator IAN MACDONALD: So you have heard.

Mr Duyshart : We have heard that there are things, but it is unsubstantiated, and that is part of the clarification. A lot of different people and organisations can say or suggest different things there, but whether they come true or not remains to be seen.

Senator FISHER: I will follow up Mr Husic's questioning and the fact, I suppose, that with, for example, the provision of utilities—take gas—the provider owns the network for supplying it and maintains it et cetera. Is that the way in which those sorts of things operate in practice today, including the obligation on the supplier to maintain et cetera? Is that legislated? How does it come about? Obviously it has been happening for such a long time, maybe we have forgotten the original underpinnings for it. Is it underpinned by legislation? Do you know?

Mr Duyshart : I cannot immediately answer that question.

Mr Lindsay : It is a good question.

Senator FISHER: I will not ask you to take it away on notice. I will follow it up another way.

Mr Lindsay : I assume it would be under state legislation, but I don't know.

Mr Musgrave : If anything it would be in planning permits and things like that—your checklist of conditions that you have to build the development to. They would be state regs.

Senator FISHER: To go back to Mr Duyshart's point of certainty, the point is that you are certain that the provider of utilities is responsible et cetera, whereas in the current proposition with the bill, you have expectations, Mr Duyshart, that, for example NBN Co. will, but there is nothing in the bill that provides the certainty that NBN Co. will?

Mr Duyshart : Yes, most developers would understanding the existing regimes with existing utilities and the way that all works. It is because the topic is new that our consultants, subcontractors and so on are also uncertain about the way this actually works; councils and regulatory authorities are also uncertain. An education process is needed across all those stakeholders to ensure there is consistency and understanding of the approach, particularly when things are evolving and various different ministerial statements come out and so on. There is a general air of confusion and lack of education that overall creates an air of uncertainty. That is why people are less certain of this whole area, which in the past has been the domain of Telstra and has happened of its own accord, like other utilities in the past.

Senator FISHER: So at this stage, to your knowledge, there is no acknowledgement or indication, either from the minister or NBN Co. itself, that ,once NBN Co. assumes, under the terms of an agreement, the ownership of pit and pipe, it will then carry what you would expect to be the obligations to maintain it.

Mr Duyshart : That would be an example of some of the further clarification that is needed to be provided.

Mr Lindsay : There is an assumption that that will be the case.

Senator FISHER: On your part?

Mr Lindsay : Yes.

Mr Duyshart : Within the industry.

Senator FISHER: Right, in the industry. Have you seen the assumption being reciprocated by either the government or NBN Co.

Mr Duyshart : To my knowledge, no.

ACTING CHAIR: Can I just follow up on one question and put it in an even simpler form. In relation to whether it is the infrastructure or whether it is the home being built on the property, is accepted that once ownership is transferred the previous owner does not have responsibility for it? So you may not have clarity as to who is going to be responsible for maintaining it after the ownership is transferred, but do you accept the previous owner no longer has responsibility or owns the infrastructure?

Mr Duyshart : Who is the previous owner that you are referring to?

ACTING CHAIR: In this case the developers. Just as you hand over the house, you do not need to know who is going to be responsible for maintaining that house—you know that you are no longer the owner and consequently you are not responsible.

Mr Duyshart : That is right.

Mr Lindsay : That is correct.

ACTING CHAIR: That is the certainty you need. Beyond that it is of no concern necessarily to the developers, is it—who is going to maintain it post that point?

Mr Duyshart : That is right, other than having to deal with the perceptions of the purchasers, who will quite often come back to the developer to resolve a whole range of issues which really actually are not their responsibility. However, the perception is there whilst the developer still has a presence on site. So it is of concern to have that clarity in order to convey that information correctly to customers.

ACTING CHAIR: So that is the certainty you are looking for.

Mr Duyshart : Yes.

Senator FISHER: If there is time, I do have one more question. However, to follow up the chair's questioning, it would potentially remain the responsibility of a developer, would it not, if there were some fault in the construction?

Mr Duyshart : Yes, usually there is always a standard defects liability period that applies to any form of construction.

Mr TURNBULL: The HIA has raised a sort of threshold issue, a fundamental issue, to complain that the bill and the NBN arrangements require the developer to pay for the pit and pipe for the cable to go into, whereas in the pre-NBN era the cost of that was borne by Telstra, which of course then put in the copper and network assets. Do you have a view about the appropriateness of developers having, in this new NBN world, to carry the cost of that infrastructure?

Mr Lindsay : When we started the NBN process, we were looking as a development industry of anywhere up from $5,000 a lot and that we were going to be responsible for everything, including the roll-out of the fibre. I think over the last couple of years the industry has come to the view that it accepts that this might an added cost of business to roll out the pit and pipe.

Mr TURNBULL: What do you think that is going to cost per lot on average?

Mr Lindsay : It varies depending on the location—

Mr TURNBULL: Say a typical subdivision.

Mr Lindsay : Eight hundred dollars to $1,000 is typical. I assume that it would probably come in that ballpark.

Mr TURNBULL: In multidwelling units, in a block of apartments, I assume the developer has always paid for the conduit. Is that right?

Mr Duyshart : The infrastructure within the building?

Mr TURNBULL: That is right. The rises and the conduit go through the slab.

Mr HUSIC: And the lead-in to the building.

Mr TURNBULL: Is that right?

Mr Duyshart : Usually it is the carrier that takes it to that point. They come to what is known an MDF room within the building. That is the demarcation point where the carrier comes to that point and connects into the reticulation within the building.

Mr HUSIC: So you do not have a private pole that goes from the street. From the network boundary in the street to the MDF, you are saying that it is at the MDF point.

Mr Duyshart : Yes, that is where the carrier takes it.

Mr TURNBULL: That is good. Thank you.

Mr HUSIC: I understood that the government is going to direct NBN as the provider of last resort for fibre to do it at no cost to developers but there will be some residual cost to yourselves.

Mr Duyshart : The cost of the pit and pipe.

Mr TURNBULL: The cost of the pit and pipe is there whether Telstra or NBN Co. do it.

Mr Lindsay : Correct.

Mr TURNBULL: So just to be clear—and, Mr Husic, correct me if I am wrong; everyone correct me if I am wrong here—my understanding is that in every new development it is the developer's obligation to pay for the pit and pipe and it must be fibre-ready. Correct?

Mr Duyshart : That is correct.

Mr TURNBULL: If it is over 100, the NBN will take the obligation of 'fibre-ing' it. If it is under 100 it is now proposed, based on the new rules, that Telstra will lay copper in that fibre-ready pit and pipe infrastructure.

Mr HUSIC: If it is less than 100.

Mr TURNBULL: What I have been floating with you and other witnesses is enabling the developer to leap ahead and have fibre installed and then be appropriately reimbursed for that, which you endorse as indeed many of your members have.

ACTING CHAIR: I note that one question was put on notice by Senator Fisher. I ask that the UDIA respond by mid-day Monday so that we can allow the committee to give consideration to this bill in a timely way. Thank you for attending today to assist the committee with the review of the fibre deployment bill.

Proceedi ngs suspended from 12: 34 to 13: 23