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Environment and Communications Legislation Committee
BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO
NBN Co. Ltd
- Committee Name
Environment and Communications Legislation Committee
Xenophon, Sen Nick
Abetz, Sen Eric
Birmingham, Sen Simon
Singh, Sen Lisa
Ludlam, Sen Scott
Bilyk, Sen Catryna
Joyce, Sen Barnaby
Fawcett, Sen David
Conroy, Sen Stephen
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Environment and Communications Legislation Committee
(Senate-Thursday, 30 May 2013)
BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO
Department of Broadband, Communications and the Digital Economy
Special Broadcasting Service Corporation
Australian Postal Corporation
NBN Co. Ltd
- Department of Broadband, Communications and the Digital Economy
- BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO
Content WindowEnvironment and Communications Legislation Committee - 30/05/2013 - Estimates - BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO - NBN Co. Ltd
NBN Co. Ltd
CHAIR: I call witnesses for NBN Co. Mr Quigley, would you like to make an opening statement?
Mr Quigley : Yes. I would first like to address the issue of how contractors working on the NBN managed the handling of asbestos. I want to reassure you and the Australian public of our commitment to the high standard of safety across every aspect of the project. The health and safety of our contractors, workers and communities is our No. 1 priority. Asbestos containing material in telecommunications pits and ducts is an issue with a long history in Australia. We know this very well. It is by no means a new issue.
That is why from day one we have built processes and enforced procedures for the management of asbestos hazards. We require our contractors to have certified management systems, work procedures and detailed management plans which are verified as being compliant with contractual and legislative requirements. Those requirements include the work health and safety regulations of the Commonwealth act, the code of practice on how to manage and control asbestos in the workplace and the code of practice on how to safely remove asbestos. NBN Co. has also implemented a system of regular audits as a means of verifying our contractors and their subcontractors ongoing compliance with these requirements.
Telstra retain ownership of the pit and pipe infrastructure and has primary responsibility for the remediation of its infrastructure to make it fit for NBN use. I welcome Telstra's commitments to maintaining industry best practice when it comes to handling asbestos and their actions this week to undertake an audit into the work practices of their contractors in relation to asbestos management and removal. In fact, I have spoken several times this week with Brendan Riley, Telstra's chief operating officer, and we agreed that addressing community concerns is critical and to that end, NBN Co. and Telstra will work together to further improve how we notify people of activity in their area. It is important we get the balance right between informing people of a risk and not causing undue alarm.
NBN Co. has also activated a cross-company team of senior managers reporting to the Chief Operating Officer, Mr Ralph Steffens, to manage and oversee asbestos related issues. The team has this week met with representatives from NBN Co.'s prime contractors. We also had Comcare in attendance. I think that was on Monday this week. That was to reiterate our expectations for the safety of workers and residents in the communities where the NBN is being rolled out.
Like Telstra, we expect our contractors to get this type of work right every time. So we are extremely concerned any time we see that proper processes have not been followed. For your information, at the end of April we had some 3,650 contractors working on network construction who had completed safety and awareness training, which includes training in the identification and handling of asbestos. To date, NBN Co. has conducted more than 2,900 audits and inspections of its contractors to ensure that they are complying with health and safety requirements. Furthermore, Comcare audited NBN Co.'s hazardous procedures programs in 2012 May and did not find any issues with regard to health and safety.
That does not mean we are complacent at NBN Co. We acknowledge that the presence and handling of asbestos is an issue of immense concern to the community. We are working in close partnership with our contractors and authorities to ensure community expectations are met. We remain vigilant and take every single report seriously. We will continue to drive the highest standards of safety and compliance in all work on the NBN.
Perhaps I could now turn to other issues on the rollout. I will distribute some of the slides which you have seen at previous estimates—
CHAIR: Are you seeking to table that document, Mr Quigley.
Mr Quigley : I am happy to.
CHAIR: We will accept both those documents.
Mr Quigley : If you have the slides in front of you, these are an update on the slides that we have shown you before. We update them every time we come. We are using the same format again. The last month for which we have a complete dataset is April. At that time our number for brownfields premises passed was a little over 71,000. You can see our projections for the month of April and then through to June.
The set of graphs below the top one are what we presented at the last review. The next slide is the activity profile in greenfields. That is our fibre-to-the premise rollout for greenfields. At the end of April we had close to 33,000 premises which had been passed. In fact, in April we brought 4,860 lots into service. We have quite a strong momentum now and we look to reach the target that we have set for ourselves.
The next chart is the take-up rates. I think they tell an interesting story. We have changed that just slightly because now we are getting more and more fibre serving area modules onto the chart. We keep adding them. In the lower chart you can see that we have simplified it into three areas. There are the initial sites, which were the three Tasmanian sites. You can see those three Tasmanian sites on the upper graph. The middle section is the first release sites. They are the five first release sites. Then on the left-hand side is the volume rollout. The graph below shows you the average of all of those FSAMs. You can see that is tracking pretty well. It has not, in fact, slowed down in Tasmania; it has upticked in the last month or two. Also, for completeness's sake, you can see the table of the FSAMs themselves in the area on the right-hand side. That is not all of the FSAMs, but they are the ones that have been going for the longest. We will continue to update that graph. Overall, you can see the take-up rate is going extremely well.
The next slide is looking at the average usage in Australia. The title at the top is not quite accurate. It is the average fixed line broadband usage per month. This is measured in gigabytes per month. You can see fixed line usage in Australia for the average subscriber is 30.6 gigabytes per month. It is of course much, much lower for the average mobile broadband subscriber. On the NBN it is at 46.6 gigabytes per month as of April. That is, not surprisingly, substantially more.
The last slide is a survey that we did of all of the retail pricing that is in the market place now for the NBN. You can see it is in three groupings there because retail service providers tend to sell broadband fixed line plans in gigabytes per month of allowance. You can see that there are three categories—25 to 50 gigabytes per month, 50 to 100 gigabytes per month and 100-plus gigabytes per month. What we have done is compare our 12 meg down, one meg up plan with ADSL2+ and our 25 meg down, five meg up plan also with the ADSL2+ plans in the marketplace at the retail level. You can see that in all cases—including the 25 down, five up plan, which is a considerably better plan than an ADSL2+ plan, both in downloads and even more so in the upload speeds—the retail plans now are less than the average ADSL2+ plants at the retail level.
Senator XENOPHON: Thank you for your opening statement. I will confine my remarks to the issue of asbestos. I should disclose that I am one of the patrons of the Asbestos Victims Association of South Australia, so I have had a lot to do with asbestos victims over the years. You may have seen the media release from Telstra today on new initiatives to strengthen asbestos management. Have you seen that media release?
Mr Quigley : I have spoken to, as I said, their chief operating officer, so I am fully aware of what is in it.
Senator XENOPHON: Good. I also had an opportunity to speak to Telstra earlier today about their release. I wanted to confine my remarks to a story that appeared on Today Tonight in Adelaide and in Western Australia. It was broadcast in Adelaide on 16 May—two weeks ago today—by veteran reporter Paul Makin. That story relates to an incident involving asbestos at Seaford in South Australia. Are you familiar with that story?
Mr Quigley : Yes.
Senator XENOPHON: Have you seen the story?
Mr Quigley : I have not seen all of the story but, yes, I am aware of it.
Senator XENOPHON: I have spoken to the constituent involved. The constituent involved was quite upset about what had happened. Michael Francis was the owner of a block of land. He happened to be a builder of many years experience. He was there with one of his friends and his four-year-old son was about to start playing with pieces of asbestos from the broken Telstra box. He raised these issues and then had some fairly heated words with the contractors from Ellers the next day. The contractors denied that it was asbestos. Mr Francis ended up getting it independently tested and it was found to be asbestos. The contractor, the person in charge of the site, whilst he was denying it was asbestos had apparently had one of his workers call, asking, 'Boss, what do we do with the asbestos?' or words to that effect. So it seemed a fairly shoddy way of dealing with it.
Telstra tells me that in this particular case there was a handover of the boxes or equipment that contained asbestos to NBN in about February. Whilst I am very grateful for the minister's statement earlier today about Telstra's role in this, there are instances where NBN has a much more direct role for the dismantling of these asbestos materials. Is that right?
Mr Quigley : In doing this rollout we are dealing with the pit and duct network, which has been there for a very long time. We are well aware that there are asbestos-containing materials in that ducted pit network. We do have to deal with asbestos-containing materials.
Senator XENOPHON: And does dealing with it sometimes involve ripping it up?
Mr Quigley : It may be, in some cases, that it is the best thing to do if a pit is too badly damaged. The vast majority of the instances of dealing with pits that are badly damaged fall with Telstra because we are paying them for the job of remediation, but we cannot guarantee in every single case that there will not be one of our contractors dealing with a pit. It could be.
Senator XENOPHON: Telstra tells me that they handed it over sometime in February, in Seaford—
Mr Quigley : It could be. Generally Telstra remediate a whole area. It looks like this pit may have been missed in that. Syntheo, who was our contractor, would have taken on that remediated network and this pit might have been missed.
Senator XENOPHON: Could you take this on notice. My understanding is that Seaford was one area that was handed to NBN and that they had a role in remediating or dealing with those pits.
Mr Quigley : It could be, that is for sure.
Senator XENOPHON: Could you take that on notice?
Mr Quigley : Yes.
Senator XENOPHON: In this case, what shocked Mr Francis, a builder with many years experience, was the cavalier way that they were dealing with it. They were subcontractors—Ellers—for Syntheo. My concern is whether you have considered this in a legal sense: to what extent is NBN Co. responsible for loss or damage suffered by individuals—and the latency period for asbestos could be up to 40 years or 50 years in some cases—as a result of conduct by its contractors and subcontractors?
Mr Quigley : I will have to take that on notice. Can I say, it is not surprising that the individual, if he found such a pit on his property, was very shocked. I think we would all be shocked.
Senator XENOPHON: It was broken up.
Mr Quigley : Yes, it was a broken-up pit. It simply should not have been there. It is totally unacceptable that it was there. We continue—and we have continued right from the beginning—to stress with our contractors and with their subcontractors the importance of following the procedures which we have put in place to handle asbestos-containing material.
Senator XENOPHON: But clearly they have not been followed.
Senator Conroy: What happens with this individual subcontractor who is handling this? Is any action taken?
Mr Quigley : Yes, there is. When you have a flagrant basis of that—
Senator Conroy: There is specific action taken against—
Mr Quigley : Yes.
Senator XENOPHON: Can you tell us what has happened to Ellers' subcontractor?
Mr Quigley : I cannot tell you. I can tell you that when we have such events we insist on critical incident investigations taking place, which in this instance did take place.
Senator Conroy: There is more information available on this specific case, Senator Xenophon. We will get that for you.
Mr Quigley : We will get that and table it.
Senator XENOPHON: Will Mr Francis be given the details of that critical incident investigation, since it was his block of land and he was in the vicinity of the asbestos that was broken up?
Mr Quigley : I can certainly take that on board. We obviously have a copy of the critical incident report, which we insist on from Syntheo, and if it is possible to give it to him we will do that.
Senator XENOPHON: Will it be given to him or not?
Mr Quigley : I cannot answer that now.
Senator XENOPHON: Is it your view that it should be given to him?
Mr Quigley : I see no reason, frankly, why it should not be. But let me check. I just want to make sure that there are no questions about the fact that it is a Syntheo report which we have a copy of and whether we are able to give it to a third party.
Senator XENOPHON: Given that these issues of asbestos exposure have, unfortunately, been popping up around the country and this one relates to an NBN contractor and subcontractor, has NBN Co. sought advice as to what extent NBN Co. is responsible for any injury, loss or damage to individuals as a result of the exposure to asbestos? Further to that, because of the long latency, is NBN Co. recording instances where people have been exposed or potentially have been exposed to asbestos so that, if the worst happens in many years to come, there are records kept of that exposure?
Mr Quigley : Certainly where we have a critical incident report that happens. We certainly have a register of any event takes place, and that is in our system. Those records are not disposed of.
Senator XENOPHON: So they will be kept. But, given the concerns that have been raised about asbestos, are there steps to obtain legal advice about what the potential is over the years for NBN Co., and therefore the Commonwealth, in respect of this?
Mr Quigley : It is not something that I have put a priority on at this point. What I have been putting a priority on is making sure that we are taking the steps necessary to ensure our contractors are not exposing their workers, their subcontractors or the general public. That is where we have been putting the focus. I can take on notice the question you have asked, but to be honest I have not looked at legal liability as the first priority.
Senator XENOPHON: No, and I appreciate that, but I am just asking is that something that will be looked at in due course?
Mr Quigley : Yes, I certainly can look at that.
Senator Conroy: Including the details of what actions were taken?
Senator XENOPHON: Yes. The minister's statement referred specifically to Telstra, but of course you have indicated that there are instances where NBN Co. contractors and subcontractors could have been involved. The minister's opening statement this morning makes reference to Comcare investigators inspecting the work health—
Senator Conroy: Can I just clarify something: I have made it clear that it was both Telstra and NBN Co. in my opening statement.
Senator XENOPHON: Sure, although it did deal principally—
Senator Conroy: I am just saying. I can read you what I said on radio yesterday—whether it is Visionstream, Service Stream, Telstra or the NBN, they must take these issues seriously. Under the agreements, Telstra and NBN Co. are each required to comply with Australia's strict health and safety regime, as I said publically in the opening statement today—Telstra and NBN Co. You seemed to imply that I was only talking about Telstra.
Senator XENOPHON: No; Minister, can I just ask the question—
Senator Conroy: If you are going to paraphrase and not be accurate—
Senator XENOPHON: No, I am not paraphrasing; I was going to quote directly from your statement. It is not a criticism—you said in your statement:
Comcare inspectors are investigating the work health and safety systems of Telstra and its contractors in Tasmania, New South Wales and Victoria.
My question is, Minister, and Mr Quigley as well: given the exposure in South Australia and apparently in Western Australia, according to the Today Tonight report, will those Comcare inspectors also be investigating issues in other states where there has been asbestos exposure?
Senator Conroy: Just before Mr Quigley answers, I mentioned I understood what had happened to the contractor. We understood that the responsible subcontractor was stood down; as a result of the investigation the subcontractor's employees were re-inducted into the safe work methods statements, particularly in relation to asbestos-related procedures. That is from a Syntheo statement, I understand, at the time. So I just wanted to put that on the record.
Senator XENOPHON: I am grateful, Minister, but I just wanted to clarify: in the statement you made this morning—and I was not taking it out of context—reference was made to Comcare inspectors investigating the systems of Telstra and its contractors in Tasmania, New South Wales and Victoria. Will there also be an investigation of NBN and its contractors in South Australia and Western Australia, or where Syntheo operated?
Senator Conroy: I think I indicated, and Mr Quigley indicated—I went through it at some length, and I think Mr Quigley did the same thing, and this might be different from the opening statement but I think Mr Quigley also covered off on it in his opening statement—that, as at the end of April, 3,650 contractors working on the network had completed safety and awareness training, which included training in the identification and handling of asbestos. To date, NBN Co. has conducted 2,947 audits and inspections of its contractors to ensure they are complying with health and safety requirements. Furthermore, Comcare audited NBN Co's hazardous procedures and programs in May 2012; it did not find any issues in regard to health and safety. As I think Mr Quigley said, in the past month NBN Co. has met with Comcare. In terms of the Perth issue, my understanding is Comcare were called in, so there is a Comcare report, if not completed, underway. With the one in South Australia, I think Syntheo have indicated what they did with the subcontractor.
Senator XENOPHON: So just to clarify this, you have made it clear that Comcare inspectors are investigating what occurred in terms of the systems of Telstra and its contractors in Tasmania, New South Wales and Victoria. Will there also be an investigation by Comcare inspectors of what occurred with respect to NBN and its contractors in South Australia and Western Australia?
Senator Conroy: As I said to you, in Western Australia—
Senator XENOPHON: Alright, in South Australia then?
Senator Conroy: My understanding is that in Western Australia it happened at the time. There were two different incidents in Perth. In one Comcare, was called in and it was, I think, Telstra workers. There was an issue where I do not whether or not Comcare inspectors were called in. I am happy to take that on notice and come back to you. It was in Vic Park.
Mr Quigley : Comcare was—
Senator Conroy: Comcare was called in in Vic Park in Perth, so Comcare were called in at both of the two incidents. In South Australia—
Senator XENOPHON: Will Comcare be called in in South Australia to investigate it? That is what I am asking. You obviously both take it very seriously. Will there also be an investigation in South Australia?
Mr Quigley : Yes, certainly. As I said, we in fact had a meeting with all of our companies—that is Service Stream, Visionstream, Lend Lease, Silcar, Transfield and Thiess. We met all of them on Monday, before there was any mention of this in the media, together with Comcare. This is something we do on a regular basis.
Senator XENOPHON: And this was broadcast in South Australia. I think it was the first broadcast back on 16 May. My final question in relation to this is that, Mr Quigley, there are media reports of allegations that Syntheo has forced subcontractors to sign strict gag orders preventing them from speaking publicly about any facet of their work. Whilst I can understand there might be issues of commercial in-confidence matters, but what attitude would NBN Co. have with respect to any gag order that related to issues of occupational health and safety?
Mr Quigley : I am not aware of any gag orders on occupational health and safety by any of our contractors. Whether they have asked their subcontractors to not talk about other issues, I simply cannot say.
Senator XENOPHON: Can you guarantee, given your genuine concerns about this—
Senator Conroy: I think, and NBN Co. have said this previously, there are no gag orders enforced or required as part of any NBN contract, other than over commercial-in-confidence issues. So there are none. We have no gag orders with the subcontractors. The subcontractors issue is not an issue we have been aware of, and we have said it is not a requirement of NBN Co. But I would not imagine that any gag clause would cover a health and safety issue, irrespective of what a contract said.
Senator XENOPHON: It depends what—
Senator Conroy: No, I do not think any gag clause can be used as an excuse—
Senator XENOPHON: It should not.
Senator Conroy: by a contractor or subcontractor to not notify of asbestos. Let me be very clear about that. I think that would probably be an illegal clause in a contract and would break an number of laws.
Mr Quigley : Can I just add that we go a step further than that. It is not a question of not having gag orders; we have set up a system, a process, to make sure that all of the people who are working on the NBN Co. have a no fault policy to try and get people to report all incidents. We encourage people to report incidents even if there has been no damage. If, for example, there is potential of an asset strike, if there is a near miss, we encourage them to report it. We look at those reports on a monthly basis, the same way as airline industries do.
Senator XENOPHON: Including occupational health and safety?
Mr Quigley : Absolutely—especially including occupational health and safety.
Senator XENOPHON: I have to finish up now. On notice, can you give us details, without details of who said what, of the sorts of complaints, or the sorts of reports, you have had, including occupational health and safety complaints?
Mr Quigley : In fact, most of them are occupational health and safety reports because they are related to strikes where there could potentially be an injury.
Senator Conroy: And you are talking about asbestos specifically.
Senator XENOPHON: About oc health and safety and asbestos particularly.
Mr Quigley : Okay.
Senator Conroy: It is just that oc health and safety across the country on a project this size is an enormous—
Senator XENOPHON: Asbestos—
Senator Conroy: And asbestos could be done relatively quickly and easily.
Senator XENOPHON: Asbestos particularly would be useful.
Mr Quigley : Okay.
Senator ABETZ: I understand that NBN Co. has a NBN safety & awareness courseparticipant workbook. Is anybody aware of such a document or publication?
Mr Quigley : We have quite a number of documents on safety. Have you got the document there?
Senator ABETZ: No, I do not have the document.
Mr Quigley : If you had it, I might recognise it. What was it again?
Senator ABETZ: 'Participant workbook, NBN safety and awareness course book'. The criticism that has been made of it is that there are only two pages in it dealing with the issue of asbestos. I am just wondering if NBN and the officials here are aware of that document or whether that document might have been potentially created by somebody else dealing with the NBN rollout.
Mr Quigley : We have a range of documents. We also have a range of courses.
Senator ABETZ: Can anybody help us? Do we have such a participant workbook?
Senator Conroy: I was a little bit confused. Were you implying that it was an NBN produced document or not an NBN produced document?
Senator ABETZ: I have been advised that it is an NBN Co. document; however, I am only going on advice and therefore I am willing to countenance the possibility that the advice I have been given by a punter may be incorrect.
Senator Conroy: I get the sense, from the looks at the table, that nobody has a copy handy, but we can take any questions on notice.
Senator ABETZ: If you can take that on notice, then tell us how much of that is devoted to asbestos handling.
Senator Conroy: Is there are particular size of the number of pages you believe—
Senator ABETZ: Two pages, I was told.
Senator Conroy: No, I was asking whether there was a number of pages that you thought was a more appropriate number. Is 10 appropriate, 20?
Senator ABETZ: I am the one asking the questions. I just want confirmation.
Senator Conroy: I just wanted to understand you question, that is all.
Senator ABETZ: It is whether or not there were only two pages devoted to asbestos handling. It is a very simple question and the answer will be either yes or no. If the answer is no, could you then take on notice how many pages were, if any, devoted to the issue of asbestos handling.
Mr Quigley : Certainly, we can. Just to give you some reassurance, Senator, our complete occupational health and management system is accredited to the Australian Standard 4801. So all of the documents we produce around our occupational health and safety measures had been through the appropriate Australian Standards accreditation process.
Senator ABETZ: I am sure that is the case. The question is, that which has occurred clearly shows that there are some issues, and I think that was the point of Senator Xenophon's questions and mine as well, to ascertain how these issues are arrived at. I know that Senator Singh, with her personal involvement and understanding of matters asbestos, would be concerned generally, as am I, but also being Tasmanian senators we will be interested in what is happening in our state of Tasmania, which I want to explore later. At this stage, I just wanted to get a handle on what NBN, if anything, advised any contractors in relation to matters asbestos.
CHAIR: Before you do, Senator Conroy, can I just for the public record indicate that I have never met any senator who is not concerned about asbestos, and I am also a patron of the Asbestos Diseases Society in New South Wales—and have been for almost 20 years—so it is not just an individual senator.
Senator ABETZ: Apologies for missing you out. I was trying to show some bipartisanship in my home state of Tasmania between Senator Singh and myself. I am sure Senator Birmingham, who is sitting at the table, is just as concerned as all of us are. Sorry I missed your name, Senator Cameron, and I am sure Senator Conroy would want to be included as well, as would Senator Ludlam.
Senator Conroy: I just wanted to clarify your question so that I understood it, to assist the committee process. NBN Co. hires a prime contractor, and that is the only relationship we are talking about?
Senator ABETZ: Yes. What requirements do you have with them to ensure some degree of oversight, if any?
Senator Conroy: My recollection—we have had these discussions before—is that they are required under the contract to comply with all Australian health and safety requirements, including the asbestos ones. We are happy to confirm that, but I am reasonably certain about it because we have had some of these discussions in previous committees.
Senator ABETZ: Yes, but when the NBN let the contract, the unsuspecting punter, if they were told you are just going to put in some cable and dig some ditches, chances are that was wrong. They would in fact be told that they would have to do a bit more than that, including potentially removing asbestos. One would have imagined that that would be part of the contract.
Mr Quigley : It is quite a substantial part of our contract. The tier 1 contract is related to issues of occupational health and safety.
Senator Conroy: So tier 1 contractors—
Senator ABETZ: Including asbestos?
Mr Quigley : Of course.
Senator ABETZ: And it was in that context that I was—
Senator Conroy: Yes, so let me assist. Tier 1 contractors are required to comply with all applicable laws and to meet a range of health and safety and environmental obligations under their contracts. Not doing so would likely constitute a breach of contract, and in these situations NBN Co.'s remedies include rights to issue a notice to their contractors to immediately rectify this: to immediately suspend activities in question, step in and rectify—that is, bring in environmental experts—and seek full compensation for costs. They are just some of the things that are in there, but we will get you further information.
Senator ABETZ: Good, thank you very much. Comcare's involvement: how did that come about? If that has been covered by Senator Xenophon—
Senator Conroy: Yes, we did go through that.
Senator ABETZ: Very quickly: was it as a result of notifications to Comcare, or did Comcare, from media reports, get involved?
Senator Conroy: The majority of the cases that we have been talking about publicly are issues relating to Telstra, so you would need to direct some of those questions, for absolute accuracy, to Telstra. We can give you some information based on—
Senator ABETZ: Yes, but your understanding.
Senator Conroy: the information that we have. We have already discussed a number. In Perth there was an incident in which Comcare was called in and—
Senator ABETZ: Yes, but the question is by whom?
Senator Conroy: Yes, I am just trying to remember by whom. I think Don Randall—is it Don Randall? My office will—
Senator ABETZ: The federal member for Canning?
Senator Conroy: Yes.
Senator ABETZ: A very effective member.
Senator Conroy: He was involved. I do not think he called in Comcare; I think he called in a camera. But I think Comcare was called in—
Senator ABETZ: So it varies from case to case?
Senator Conroy: So Comcare in this instance, which had nothing—as I said, NBN was not involved in it. But I think possibly even Gary Gray might have called in Comcare. From my recollection of some discussions, although I could be doing him a disservice, Don Randall called in the photographers, Gary Gray, I think, called in the Comcare investigators. In Victoria Park, I think following—we can take it on notice.
Senator ABETZ: Okay, just take them all on notice.
Senator Conroy: I am happy to take them on notice.
Senator ABETZ: Have there been any cases in Tasmania that have been referred to Comcare? If so, whereabouts?
Senator Conroy: I explained earlier in the day that there is sometimes a little confusion in Tasmania, Senator Abetz, because the company that is remediating the pits for Telstra is also the company that is working on the rollout for NBN Co. It is the same company. My understanding of the situation in Tasmania is that there have been complaints that the workforce has not been trained sufficiently, but I am not aware—I am happy to seek extra information—that any of the issues that have been raised involved actual asbestos. It has been a training issue rather than—
Senator ABETZ: So there has been no stop-work in Tasmania?
Senator Conroy: No, you did not ask me that; you asked about Comcare.
Senator ABETZ: Yes, and I am asking you another question.
Senator Conroy: I would have to—look, I am not even sure if NBN Co.—
Senator ABETZ: Senator Singh is saying no, and I am happy to accept that that is the case.
Senator Conroy: Again, a stop-work would be between the subcontractors and the contractor in Tasmania, not NBN—
Senator ABETZ: I am not trying to lay blame on anybody; I just want to know what the facts are. I would have thought, given your interest in getting an expeditious rollout, Minister, seeing you are just a fraction behind time with it, you might have been—
Senator Conroy: You missed the updates. As I said, I am not aware, but that does not mean there was not one. My understanding is what is in contention is that the workforce is sufficiently trained. If there has been a stop-work—there may have been, but I am unaware of it.
Senator ABETZ: That is fine, that is all I ask. You are unaware. It is a very long answer to tell me that you are unaware of those—
Senator Conroy: I am though.
Mr Quigley : I am aware that there was a report that Comcare did do an investigation in Tasmania. They found no incident other than it was more procedural. There was a signature missing from a document and a person was wearing the wrong type of shoes.
Senator ABETZ: Right.
Mr Quigley : They should have had boots without laces; they had boots with laces. I am aware that is what our records show of that incident in Tasmania. So it was not actually an exposure or incident, it was a procedural issue.
Senator ABETZ: Thanks for that, Chair. Can I just ask one final question that is a general one: question No. 279, in which I asked about collective agreements last time round, was taken on notice. Still not answered.
Senator Conroy: Apologies. I will see where that is up to.
Senator BIRMINGHAM: We have received 80 answers in the last hour, so it is possible that it may well be one of those, but unsurprisingly I have not had a chance to read them yet.
Senator ABETZ: Thank you very much for your forbearance, Chair.
Senator SINGH: Thank you for your opening statement, Mr Quigley. Clearly it is good to hear that NBN has good management practices in place. But clearly also we are all aware that Telstra has responsibility for the pits and the ducts, some of which contain asbestos in the concrete. I understand that Telstra has been remediating these pits and ducts across the country for many, many, many years, and therefore would be very well aware that come the time of NBN starting to be rolled out that it would need to remediate those ducts. When the beginning of the NBN rollout commenced and contractual processes were going on, was asbestos canvassed by Telstra—specifically the areas where NBN would have to roll out the fibre-optic cable—and did Telstra canvass with NBN that it would need to remediate those pits and ducts?
Mr Quigley : We are in fact using a huge volume of the Telstra pits and ducts. Both organisations were absolutely aware that, given the age of some of those ducts and pits—there have been various materials used, all the way from some very early stuff and then, following the Second World War, there was some of this asbestos-containing material and then it moved to polyethylene et cetera—there were different materials used, and so both companies were clearly aware that there is a substantial amount of that material in the Telstra network. Both companies put in place, as you would expect, the procedures for dealing with that, including for training. So, yes, both companies I think are absolutely aware that the material is there.
Senator SINGH: In that process, did Telstra agree that as it is responsible for the pits and the ducts that it would be remediating those before the NBN came along and rolled out its cable?
Mr Quigley : It has been remediating ducts and pits even well before the NBN; it is an ongoing maintenance of the network. So it was doing it for many years before NBN started.
Senator SINGH: Yes, I just said that.
Mr Quigley : So, yes, it is well aware of that.
Senator SINGH: But did it agree that it would actually do that work before NBN would come and put its cables in place?
Mr Quigley : Yes, absolutely. Part of the deal is that it is responsible for remediating the ducts and pits to make them fit for purpose.
Senator SINGH: Okay. So with the contractual relationship: there have been some contractors used who have then used subcontractors, and there have even been some subcontractors who have used further subcontractors, which is where—
Mr Quigley : It is the nature of the Australian industry.
Senator SINGH: That is the nature of some parts of the Australian industry.
CHAIR: It is pyramid subcontracting and it is a problem.
Senator SINGH: Yes, that is right, Chair. So that, it seems, is where some of the problems lie, although the responsibility of the pits and ducts still lies with Telstra, and Telstra should have been ensuring that the safety procedures were followed through no matter who the contractor or subcontractor was. But in some cases, like I think you have raised with Tasmania, where there has been one contractor used who has actually been doing both jobs—the rollout for NBN, but also the remediation for Telstra. In that kind of particular circumstance, do you see that that could end up being a conflict or a situation where you would need to ensure that one was obviously done before the other and not done in an unsafe way?
Mr Quigley : No, I would not see a conflict. I think both organisations have procedures in place to deal with asbestos-containing material when they come across it. Whether the contractor is working for Telstra or the contractor is working for NBN Co. we both have procedures in place to make sure that those contractors are trained. I believe both organisations are going about that diligently and taking action. Clearly, if something happens that should not happen, both organisations will take action. I do not believe there is any problem with any conflicts of interest in that.
Senator SINGH: But if you have got then both organisations ensuring that asbestos training is carried out on contractors—and you have only got one contractor you are dealing with in that case for both—and that one contractor is not carrying out the safety in the best manner it should be, what has gone wrong? You have your safety management plans in place, you have contracted the work out, why wasn't it followed through to ensure that everyone was trained up and ready to do the job properly?
Mr Quigley : Both organisations do put a lot of effort into training. As you heard, with NBN Co. we have put a lot of people through training courses—and by the way there may have been a media report somewhere that this was a half-day training course; in fact, it is a two-day training course we put people through. I do not know for certain but I am sure that Telstra would do something very similar. It is very hard to explain, given all that training that has taken place and all the effort and auditing, why a failure has taken place. Failures do take place. Our job is to immediately take the action as fast as we can and as thoroughly as we can and learn from incidents and make sure they are rectified quickly and we then improve the ongoing processes.
We cannot obviously guarantee that with the amount of work going on that there will not be incidents. Our job is to minimise those, train people and learn from them, which is why by the way whenever we have an incident take place we have what are called toolbox meetings. So if an incident takes place—and I am not just talking about asbestos but any safety-related issue on any site—we have a system where that can get promulgated right around the country. We have toolbox meetings—in other words, first thing in the morning the workforce in that area will be told about the incident, what we learned from it, what we should do differently and what procedures have to be changed. That is the type of thing you can do to minimise that.
Senator SINGH: As I said at the outset, I think NBN have very good management systems in place. I think you have provided that in your opening statement, but if NBN are rolling out the fibre optic and Telstra are remediating the pits and ducts there shouldn't be that many instances where NBN contractors are coming across asbestos because Telstra should have already done that work if Telstra have done what they should have done?
Mr Quigley : Yes, but they will not necessarily remove all the duct that is under the ground—
Senator SINGH: But they will remediate it. They will make it safe for the NBN contractor to go in. That is their job.
Mr Quigley : We cannot, will not and do not assume that we will not come across asbestos even though Telstra may have done an excellent job, which we are seeing every indication that they are overall doing a very good job, although there have been some instances as we have seen. We do not assume that we will not come across asbestos, which is why we put people through the training courses. We have to assume that we could come across asbestos.
Senator SINGH: Do you think Telstra have let down NBN Co. by not remediating the pits and ducts as they should have before NBN Co. contractors went in?
Senator Conroy: I think Telstra yesterday and in their press release today have accepted full responsibility for what has happened, particularly in Penrith and in other places around the country, so I think it speaks for itself.
Senator LUDLAM: I suspect we may come back to this issue later in the evening. I just want to turn to some of the other issues that you mentioned in your opening statement but also come to the issues of contractors and subcontractors, because it is one of the things that was also blamed when the company suffered pretty significant delays that were announced between last December and whenever we were last in Sydney, in March or April. You mentioned a number of 3,650 contractors that had done safety training. Is that the total compliment of sub-contractors working through various companies for NBN Co?
Mr Quigley : I cannot give you the exact number, but our aim is to put every single contractor and subcontractor who works on the NBN through those courses, so I think it would be very close to that number. Obviously, day by day it changes, but that would be roughly the number.
Mr Steffens : Correct.
Senator LUDLAM: How many of those are on 457 visas? Do you have any figures on that?
Mr Quigley : I do not know. I would have to take that one on notice.
Senator LUDLAM: Are you likely to be able to find out? I guess I cannot ask you to judge likeliness, but would your top-tier contractors have that information? If they do, do you know whether they would pass that on to NBN Co?
Mr Quigley : I would have to take that on notice. I do know that there have been some specialised skills that have come in from overseas. For example, ribbon splicing would be an area.
Senator LUDLAM: I could understand why that was the case, because I do not imagine there was a very big jobs market for that in Australia until you turned up.
Senator Conroy: I think we were the first to deploy ribbon fibre.
Senator LUDLAM: There is a lot of skilled labour involved here; there is also a lot of semiskilled labour. Across what categories would you be able to identify the proportion of your workforce that is on those visas?
Mr Quigley : I do not have that—
Senator LUDLAM: I understand you do not have it at the table.
Mr Quigley : We will take it on notice.
Senator LUDLAM: Thanks. Could you just step us through some of the issues that you worked through in your opening presentation: slide 4, the take-up rate by FSAM. Am I reading that graph of averages right, that it would tend to indicate that the uptake in the trial sites has actually been quite a bit slower? Is it a volume rollout?
Mr Quigley : That is the case. They are the three Tasmanian sites.
Senator LUDLAM: Yes. What do you put that down to?
Senator Conroy: We started in the toughest state and in the toughest regions in the toughest state. It was one of the reasons we started there. Going right back to the very beginning, the Tasmanian government wanted to put their hand up to be part of it from the beginning, but we chose some of the toughest spots. Back when we started, in 2007-08, Tasmania only had one-third of the state using broadband. In other words, two-thirds potentially, if they wanted to get on the internet, used dialup. So when we started it was the toughest. Back in 2009-10, the debate that we are having today about broadband was very much in its infancy, and so the public knowledge and understanding of what the NBN could bring was probably, I think it is fair to say, a lot lower than it is today. We have had four years of fairly heated public debate. As you can see from the figures, as we open new areas the knowledge and understand of what the NBN can bring to Australian businesses, homes et cetera is showing an ever-increasing demand.
Senator LUDLAM: I guess that seems reasonable. The first release site graph is also much more shallow. The volume rollout is obviously trending at 45 degrees, so—if I am reading it right—that is a sign that the take-up has been much more rapid.
Mr Quigley : That is correct.
Senator LUDLAM: What is the explanation for the kink in the volume rollout, in the averages, between weeks 21 and 31? We actually go into—
Mr Quigley : That is just simply an artefact of the averaging. If you look at all the graph above and all the red lines, week by week we have averaged each take-up rate for each of those lines. So it is just an artefact of how the take-up rate went.
Mr Steffens : We released, at one point, a number of sites which had a zero per cent take-up rate. Hence, you see this little dent.
Senator Conroy: I could add to my answer earlier, Senator Ludlam. The sorts of examples that I am about to read did not exist back when we started the Tasmanian rollout sites. This is from Dave Laarhoven. He runs a small media and marketing business from home on NBN fibre in Coffs Harbour. In the Coffs Coast Advocate he said:
I'd say the NBN has improved my work efficiency and productivity for my business by between 100 and 200% …
Senator LUDLAM: I think we are using estimates for advertising.
Senator Conroy: No. You asked a question about why it was low at the beginning and it is very high now, and I am giving you a reason why. He goes on to say:
A lot of the time I save through the NBN comes with far better speeds in downloading and uploading.
I have to video conference a lot in my line of work and there is no fracturing when I use Skype.
Senator LUDLAM: I guess I walked right into this one.
Senator Conroy: I am happy to stop there to allow you to keep questioning, but that sort of example did not exist when we started in Tasmania, in Scottsdale, Smithton and Midway Point.
Senator LUDLAM: Mr Quigley, would you expect to see that curve increase in steepness as you continue into the volume rollout or is this about as fast as you reckon the uptake is likely to get?
Mr Quigley : This is very rapid uptake. Compared to previous technologies—ADSL, HFC or even dial-up—and compared to take-up rates that other service providers, other telcos, see around the world, this is a very rapid rate now with those new sites. I would be, frankly, astonished if it went even faster than this. These are really quite spectacular take-up rates.
Senator Conroy: I will come back later to talk a little bit more about that, Senator Ludlam, but I will let you keep going.
Senator LUDLAM: When the joint NBN committee convened in Sydney six or eight weeks ago, it was right off the heels of a rather abrupt announcement that you figured you would be six months behind schedule by 2022 or whenever the build is likely to be completed, or you are six months behind schedule as of now and you will be on time and on target—
Mr Quigley : No, we are three months behind.
Senator LUDLAM: Do you consider that that is still accurate, that it still prevails?
Mr Quigley : Yes.
Senator LUDLAM: On slides 2 and 3, there are the curves and estimates that you provided for us. Last time, you provided the joint committee with the first accurate, or reasonably accurate, across a large sample size, estimate of cost for the different cohorts. You have not reproduced those—
Mr Quigley : We have not reproduced those. There is no additional substantial information that would change those. That is why we did not include them.
Senator LUDLAM: You also did not include my favourite, which is the user profile, being upside down compared to what was in your business plan.
Mr Quigley : Yes.
Senator LUDLAM: Do you have anything to report and are you—
Mr Quigley : No, other than it is variable. Remember, our long-term plan was that we expected the user profile to shift more to the lower end, where we had been predicting. I think we are seeing that as we see more and more people take up and see people move across from the copper. It will shift down, and we are seeing it shift down. It is still nowhere near where we project it to be in the long term, so it is still a bit upside down but not as upside down as it was before.
Senator LUDLAM: That is good. I will ask you—as I think I have done four or five times—are you going to end up having to recalculate your business case or the return to the taxpayer if those rates of uptake of the different user profiles prevail? It is a good story, but—
Mr Quigley : It is a good story. Still, it is very early days and we will stick with the numbers—
Senator LUDLAM: Engineers. One of the things that had caused fairly significant delays that we spoke of at that hearing in Sydney was fibre splicing that needed to be, basically, torn out of the ground and redone. I am probably using slightly lazy language here. Up to 30 per cent in some areas were found to be defective and were replaced.
Mr Quigley : That was not an average. That was not a number that NBN Co. talked about. That is a number that I think somebody else had reported that they had heard from someone in the field. We did not contradict it, because it is possible in some location. If someone were not trained properly, you may get a rework of that rate. That is not what we would expect to see in the long term and it is not what we are seeing in the long term. I do not know whether Mr Steffens would like to add to that.
Mr Steffens : We do not see that failure rate as an average at all. I was in the field only last week and spoke to an experience splicer. The failure rate is in the very low single digits. That is what you would expect from an experience splicer. If somebody is fresh on the job, you would expect a higher fault rate, but overall we expect and see fault rates in single digits.
Mr Quigley : Regarding the 32 per cent that was quoted, it might have been quoted for one instance in one place. We know of no—
Senator LUDLAM: I do not have a citation.
Senator Conroy: One team that was doing one specific area was having that sort of difficulty, but, as Mr Steffens has said, that is not an average or even representative.
Mr Quigley : We are obviously not going to tolerate that. We are getting better and better views on those types of measures; we would move in very rapidly if that were happening.
Senator LUDLAM: You have not reported anything on that issue on paper this time around, but do you feel as though the fault rate for those installations has fallen back to the industry average or to something that you feel happy to tolerate?
Mr Steffens : In general I would say yes, but since we are still adding a lot of additional resource onto the project, we are training a lot of splicers, the inexperience will continue—we will initially produce a higher fault rate, but we consistently see this fault rate coming down as they gain more experience. We obviously provide work opportunities for years to come for these people; therefore, the initial learning curve people are on, we are quite comfortable with.
Senator LUDLAM: All right. I will leave it there. Thank you all; I wish you well. I got to see the NBN truck the other day for the first time and it's great—bring it to WA!
Senator SINGH: Hear, hear! I agree.
Senator Conroy: You have had it in Tasmania a fair bit.
Senator LUDLAM: We have not had it in WA that much, and the people working on it clearly love their jobs. It looks like it would be great fun.
CHAIR: We will go to Senator Birmingham.
Senator BIRMINGHAM: I have some questions on asbestos. Mr Quigley, when did NBN Co. first become aware of issues surrounding the maintenance and handling of asbestos by NBN Co. or Telstra contractors?
Senator Conroy: In which instance, or are you saying in every instance?
Senator BIRMINGHAM: In the first instance.
Senator Conroy: We would have to take that on notice.
Mr Quigley : I can give a general answer, Minister. We have anticipated from the beginning of the project that we would have to deal with asbestos-containing material. That is the nature of the network that exists in the ground today, as it does, by the way, in lots of other infrastructure—fences, houses, all sorts of things. We anticipated we would have to deal with it, therefore we put the procedures in place as we developed our occupational health and safety system.
Senator BIRMINGHAM: So when was the first time you became aware that those procedures had not been appropriately followed?
Mr Quigley : I would have to look up in our register when the very first incident was that we have of an asbestos related report. That may not necessarily be an incident; it could be a procedural issue, as we talked about in Tasmania. But I would have to check on that.
Senator BIRMINGHAM: I appreciate there are logs of procedural issues, and it is important in terms of keeping the holistic approach to managing your occupational health and safety issues intact that that is done. Are we talking, in terms of more serious issues, days, weeks or months when you first became aware of issues that alerted a concern that has led to the types of discussions and engagements that have obviously happened in the last day or two?
Mr Quigley : I know of, obviously, the incident that took place that was referred to by Senator Xenophon in South Australia. I would have to check our logs to see if there was any incident where there was something like that earlier. I simply cannot answer that one off the top of my head.
Senator BIRMINGHAM: When did you become aware of the issues in Penrith, Ballarat, Perth or Tasmania?
Mr Quigley : The issues in Penrith, just recently—the last few days.
Senator BIRMINGHAM: Ballarat?
Senator Conroy: Probably read it in the paper.
Mr Quigley : Yes, Ballarat, same. Remember, these are sites where Telstra remediation is taking place.
Senator Conroy: And with the Tasmanian situation, as I said, there have been some reports in the media in the last couple of weeks.
Senator BIRMINGHAM: So, with all of these instances, did you learn through the media or did Telstra advise NBN Co. before these became public issues?
Mr Quigley : I cannot tell you the exact timing. It may have been almost coincidental. We have regular discussions. If Telstra has an issue, they will normally inform us.
Senator BIRMINGHAM: Have there been instances of Telstra informing you that they have had problems with the clearance of asbestos from particular ducts that require a slower handover, a deferred handover, of those pits?
Mr Quigley : That is part of the normal job they are doing all the time. They are remediating a duct-and-pit network that has asbestos-containing material in it. We know they have a raft of procedures and we know some things will go faster or slower depending on how they have to handle that. They certainly do not report to us day by day every time they deal with asbestos. We would not expect them to either. It is their job to look after that.
Senator BIRMINGHAM: Are there any serious instances of NBN Co. contractors mishandling asbestos?
Mr Quigley : We talked about one here today, in South Australia, where it sounds like it was a pit where a contractor working for us took it out of the ground. We will have to dig into that, but that is clearly an instance.
Senator BIRMINGHAM: Are there any others that you are aware of?
Mr Quigley : At Victoria Park also there was a complaint. I think that was back in February. I think that was a complaint that came to Comcare, and obviously they contacted us. That was near a Telstra pit. That was back in February, so that predated the South Australian instance.
Senator BIRMINGHAM: And these are the only serious, or potentially serious, instances that you are aware of?
Mr Quigley : They are the potentially serious ones that I am aware of. We deal with occupational health and safety issues on a regular basis—a variety of them, by the way, not just asbestos but anything that is potentially an occupational health and safety issue—so I would have to go back and look at the records of all the meetings that we have had.
Senator BIRMINGHAM: Are any of the other officials present aware of any other potentially serious incidents?
Mr Steffens : Off the top of my head, I cannot point you to an incident. We can go back to our records and provide you with that.
Senator BIRMINGHAM: Thank you. Has NBN Co. ever engaged any contractors or subcontractors to conduct any remediation work in Telstra pits or ducts?
Mr Quigley : Yes. There could be events in which we do remediation.
Senator BIRMINGHAM: You do remediation?
Mr Quigley : As I said, the vast majority of the remediation is done by Telstra, but in a network rollout of this sort it is quite likely that we have—in fact I know we have—done some remediation of pits.
Senator BIRMINGHAM: And these are circumstances where Telstra has not completed the job or NBN Co. has wanted earlier access to the pits than Telstra was able to provide?
Mr Quigley : It could be, or we have agreed with Telstra that we will remediate these particular pits as part of doing the job.
Senator BIRMINGHAM: So it is part of a planned remediation process that NBN Co. participates in as well?
Mr Quigley : Yes. That is right. What I cannot tell you is that every time every contractor that we may have employed, where they have touched a pit, that is part of a planned activity with Telstra. I cannot tell you for sure that there has not been a contractor or a subcontractor of a contractor who has done something on a pit which was not part of a plan. I suspect—I do not know for sure—that the South Australian one was such an event.
Senator Conroy: Can I just clarify? In terms of the total amount of remediation that is being done, you indicated you have done some; are we talking 50 per cent, 20 per cent, 10 per cent, five per cent, one per cent?
Mr Steffens : In terms of—
Senator Conroy: When you said you directly remediate a pit.
Mr Steffens : It is a very small percentage.
Mr Quigley : By the way, I think we expect that percentage to even decrease in future.
Senator BIRMINGHAM: What time lines and notification periods does NBN Co. provide Telstra with to ensure that pits are remediated before Telstra is required to hand over access to them?
Mr Quigley : This is a normal nominal agreed three-month remediation period. But that varies. That is an agreed long-term average.
Senator BIRMINGHAM: So sometimes longer, sometimes shorter.
Mr Quigley : Sometimes faster, sometimes slower.
Senator BIRMINGHAM: In a location like Ballarat, where Telstra remediation work is happening on the ground and NBN Co. rollout is happening on the ground simultaneously, how short can the time frame get between indicating to Telstra that you need access to these pits and Telstra having to hand them over?
Mr Quigley : We start to do the work, the subsequent work, to remediation only after Telstra has handed them over to us and they finish that work. I know of no instance where we were simultaneously or concurrently working on the same pits.
Senator BIRMINGHAM: How short can the time notice get?
Mr Quigley : I do not know. That is a scheduling issue and will vary all over the place
Senator Conroy: We are happy to take it on notice.
Senator BIRMINGHAM: Again, unless Mr Steffens or somebody else is able to answer—
Mr Steffens : The remediation activities in FSAMs vary widely. It can be that Telstra hands over areas within six to eight weeks, and sometimes it takes substantially longer. It typically depends on the volume of work required in the area to be remediated.
Senator Conroy: I think he is saying it is on a site-by-site basis.
Senator BIRMINGHAM: What checks does NBN Co. do to ensure that Telstra pits are fit for use before its subcontractors begin to pull fibre through the Telstra pits, or indeed pits that NBN Co. itself has had contractors remediate?
Mr Steffens : We do regular field inspection reports but also our subcontractors do theirs and see the pits as fit for use or otherwise. They report back, obviously, if they find issues with pits which make not them fit for use.
Senator BIRMINGHAM: Are your field inspection reports a random inspection program? Is it a comprehensive inspection at every pit before it is handed over, or is it a selective test?
Mr Steffens : NBN personnel are not inspecting every pit.
Mr Quigley : We would not anticipate doing so. Telstra is a professional organisation. We have entrusted them to do a job and we expect them to do that properly.
Senator Conroy: As Mr Quigley indicated, the workforce that comes in has been through the training programs to recognise asbestos if in general they see it. In the South Australian example, as I think has been indicated, people were retrained. The workforce actually goes through a training process of, as I think Mr Quigley said, two days around the asbestos issues so that it could recognise asbestos if for some reason it discovered it in the pits.
Senator BIRMINGHAM: Is there anything you want to update there, Mr Quigley? I just noticed Mr Cooney talking to you.
Mr Quigley : No. The fact is we have—and I am going a bit on I think on your earlier question because I did hear the minister reply, so I am responding to your earlier question—obviously, a process of putting work with Telstra and trusting them to do that job. There is no reason why we believe they would not do that job properly, but if we hear a report from anywhere we investigate it.
Senator Conroy: As you are indicated, people go through two-day process—
Mr Quigley : Training process.
Senator Conroy: To recognise asbestos. So the workforce, or everyone being used directly, is trained to recognise the asbestos.
Mr Quigley : Yes.
Senator BIRMINGHAM: In light of Telstra's audit and appointment of additional inspection and supervisory staff, is NBN Co. reviewing any of its practices in terms of your handling of remediation works or otherwise of pits?
Mr Quigley : We constantly review all our procedures on an ongoing basis.
Senator BIRMINGHAM: Are you making any changes?
Mr Quigley : We do make changes on a regular basis. If I can keep coming back to this fact—it is not just on asbestos; it is on every area of occupational health and safety. We are constantly reviewing and looking at the data that we collect. We are looking at potential events—not just incidents but even potential incidents—seeing what we can learn from them and adjusting our procedures accordingly. For example, we modified recently our network design documents to take account of the information that we sought on high-pressure gas lines. That is the type of thing we are doing on a regular basis. Where we have information that comes to us, no matter what the source, if we believe it requires a modification to our processes or procedures, we will do that.
Senator BIRMINGHAM: Are there any changes to processes or procedures being undertaken as a result of the asbestos related incidents of the last few days or weeks and/or Telstra's announcement of changes to their practices and procedures?
Mr Quigley : We are certainly going to look very carefully at what comes out of the review Telstra are doing—and the audit, which I believe will be completed tomorrow. As I said, I talked several times yesterday to the chief operating officer of Telstra and we have agreed that we are going to combine learnings and make sure that between us, when we go into public areas—where we are doing work—we make whatever changes are needed to signage and communications. I think, Mr Cooney, that sort of interfacing is already starting to take place with the Telstra people who look after all of that signage and public notification?
Mr Cooney : Yes.
Mr Quigley : So the answer to your question is yes, Senator. We will absolutely be looking very carefully at what Telstra have learned and at whether or not that requires us to make some adjustments in our procedures. As I said before, we, with Comcare, had another meeting on Monday with all of our contractors to reinforce again the importance of ACM handling.
Senator BIRMINGHAM: What additional actions will be NBN Co. be taking to ensure that the confidence of residents in Penrith or Ballarat can be maintained as Telstra undertakes this work for NBN?
Mr Quigley : We will probably be in a better position to answer that when we have seen what comes out of the audit Telstra has done. We will certainly be reviewing our procedures and policies in the light of what they discover from their audit.
Senator BIRMINGHAM: Are there any differences between the processes and practices applied in relation to the augmentation of ducts as against their remediation?
Mr Quigley : The remediation is largely done, as we have said, by Telstra. The basic safety standards and principles—and work practices and codes of practice—I would expect to be common between the two. We have another document which we have not mentioned. It is called a SWMS. I cannot recall what the acronym stands for.
Senator Conroy: We learn something new every day in this job.
Mr Quigley : For every task which needs to be undertaken, we write a SWMS document and take the person who has to do the particular task through that. Where there is a task in augmentation which might be slightly different from remediation or from hauling or from splicing or from anything else, there will be a separate document which outlines how that job should be done and what the safety issues around it are.
Senator BIRMINGHAM: But remediation is primarily the responsibility of Telstra.
Mr Quigley : That is correct.
Senator BIRMINGHAM: Augmentation is done at NBN Co.'s request, is it not?
Mr Quigley : Yes, that is correct.
Senator BIRMINGHAM: Does NBN Co. take primary responsibility then for the undertaking of augmentation? And where handling of asbestos is a factor in such augmentation activities, is NBN Co. responsible for its safe handling?
Mr Quigley : Certainly. If it is work that we are undertaking, as opposed to Telstra, then we of course take responsibility for the safety standards around that work.
Senator BIRMINGHAM: Have there been any issues or incidents in relation to augmentation works to date—related to asbestos?
Mr Steffens : I am certainly aware of a number of health and safety related issues on this part of the work. I cannot recall an asbestos related issue. I am not saying there has not been one. I will go through the records to find out and get back to you.
Senator BIRMINGHAM: As you go through the records, it would be useful if you could provide details of the instances which have been encountered.
Mr Quigley : SWMS stands for safe work method statement. They are done on a task basis. If any of our contractors—and this includes their subcontractors—are doing any work which involves working on or removal of asbestos, there must be a SWMS in place so they can safely undertake the task. That means they have to have the SWMS verified by us and there has to be appropriate training and induction, and then we do verification of the competence of the people who undertake that task.
Senator BIRMINGHAM: Telstra have indicated that they are suspending all new remediation work while the audit is undertaken and their practices are appropriately reviewed. What impact will that have on the roll-out and operations of NBN Co.?
Mr Quigley : Because the remediation they are doing is in ahead of when we do the build, I do not frankly expect it to have a big impact. It is some months ahead of the build.
Senator Conroy: If you are hoping it will impact on the 30 June figures or the September figures, I doubt it. I am sorry to break your heart!
Senator BIRMINGHAM: You are not breaking anybody's heart. I am not hoping for anything tonight other than answers. So, Mr Quigley, you have no expectations that the cessation of remediation works will necessarily have an impact; Telstra will be able to catch up as required to make sure that when you have caught up and your contractors have caught up with the pits that are currently available there will be further pits available?
Mr Quigley : Yes, I do not anticipate that will have an impact.
Senator BIRMINGHAM: Minister, have you or the department or NBN Co. received correspondence from Penrith council in relation to the asbestos issue?
Senator Conroy: I believe a letter has been sent. I have not seen it yet. I have been in estimates all day but I think my office has informed me that we have received a letter. As I have been here almost all day and even in meetings in the breaks all day I have not had a chance to read the letter myself yet.
Senator BIRMINGHAM: And if you have not read it you certainly have not dealt with it or responded to it.
Senator Conroy: No, but I understand there is a meeting tonight in Penrith being attended by residents, Comcare and possibly Telstra, and I believe the local member, David Bradbury, is also attending.
Senator BIRMINGHAM: Will NBN Co. or the department have any representatives there?
Senator Conroy: As it is the department's estimates, most of the department are here. I cannot speak for NBN Co.; I am not sure.
Mr Quigley : Not that we know of. We may but we will have to take that on notice.
CHAIR: To put things in context, I think I may be the only one here who has been exposed to asbestos, although I could be wrong. I worked in the electricity commission for seven years as a fitter and when I first went there, in about 1975, there was no safety at all with asbestos. We were simply given a little tomahawk and you chopped out the valves and you put rattlers on it and you rattled away and you choked in the dust. It is not good for me to sit here and listen to all this, because who knows if there is a time-bomb ticking. That sort of activity has gone these days. We have bans on asbestos. What you have described, Mr Quigley, about how NBN deals with it is light years ahead of when workers 20 or 30 years ago were working with asbestos. I congratulate you for the work you are doing on it and thank your team for being as competent and careful with this issue as they have been. If there is still asbestos out there it is a problem we should look at, and I hope someday we can get a joint parliamentary position where we can get an asbestos eradication plan for this country. I hope the people that have been so vocal about tonight would join me in doing that. If we have finished with asbestos, we will move on.
Senator BIRMINGHAM: Thank you for those remarks, Chair. Mr Quigley, obviously your chair has changed recently to Ms McKenna. Can you describe the relationship between yourself and the chair and how it may have changed in an operating sense from the relationship you had with Mr Harrison.
Senator Conroy: The relationship between the chair and the CEO is as any relationship between a chair and a CEO. It is not for you to ask Mr Quigley's opinion. If you have a question of fact, would you like to ask it?
Senator BIRMINGHAM: Are there any practices in the work arrangements between Mr Quigley and the chairman that have changed from the change in chair from Mr Harrison Young to Ms McKenna?
Senator Conroy: In terms of the ongoing operational relationship, the relationship is positive and continues to be constructive.
Senator BIRMINGHAM: Is there a reason you will not let Mr Quigley speak for himself?
Senator Conroy: Asking Mr Quigley to comment on the chair is, frankly, pretty rude.
Senator BIRMINGHAM: I am not asking him to comment—
Senator Conroy: That is exactly what you did.
Senator BIRMINGHAM: I am not asking him to comment on the chair; I am asking to comment on whether there has been any change to the work practices between—
Senator Conroy: The chair is the chair and the CEO is the CEO, and there is a strong and positive working relationship.
Senator BIRMINGHAM: I refer to Ms McKenna's statements in the media to the effect that the minister—
Senator Conroy: No, if you are going to refer to Ms McKenna's statements you should read her quotes, not things that are claimed to have been said by her.
Senator BIRMINGHAM: Then, Minister, I am sure you would happily answer—
Senator Conroy: If you are going to quote Ms McKenna then quote Ms McKenna—do not paraphrase.
Senator BIRMINGHAM: I am sure you will happily answer, then: has Ms McKenna made any instruction that Mr Quigley should only deal with you, Minister, in her presence?
Senator Conroy: As I have said publicly already on this matter: no. That is a false report and, as I have warned you before, you really should not just read out the front page of the Australian. It is quite sad.
Senator BIRMINGHAM: Well, this is a very good opportunity, Minister, for you to set the record straight.
Senator Conroy: It is a false statement. I have already set the record straight on this. It just shows the continued campaign by the Australian to try and denigrate the NBN, the work of the NBN, the board and the CEO every single day. It has been a consistent campaign for nearly three years, and it is a blight on journalism in their biased reporting.
Senator BIRMINGHAM: Obviously you should clamp down on it.
Senator Conroy: As I said, I have corrected you as I have corrected others on this matter.
Senator BIRMINGHAM: Thank you.
Senator Conroy: Any more questions?
Senator BIRMINGHAM: Certainly there are. Have you met privately with Mr Quigley without Ms McKenna since her appointment?
Senator Conroy: Many, many times. I speak to Mr Quigley, Mr McLaren, Mr Steffens and Mr Cooney—I speak to the staff as needed on any range of matters any time it is required. They are incredibly professional and respond very diligently.
Senator BIRMINGHAM: I am sure they do. Does Ms McKenna equally meet with all of Mr Quigley's direct reports and speak with them as much as she cares to, as you appear to?
Senator Conroy: One of the things I am sure any new incoming chair would do is get to know all of the key personnel at NBN Co. In fact, I think Ms McKenna has toured the country—
Mr Quigley : She has indeed.
Senator Conroy: to every single office of NBN Co. since she became the chair in the last four months, and held meetings—I have to say public meetings given that all of the staff—
Mr Quigley : In fact I invited chairman to the two town hall meetings. I hold them every quarter. I asked her to come along and address all of our staff.
Senator Conroy: So Ms McKenna has done a tour of the country to get to understand fully all of the operational aspects of NBN as she was the new chair. Again, I repeat: you really should not believe the front page of the Fin Review, which is a travesty of journalism since Michael Stutchbury left theAustralian to go to the Financial Review. He has debauched it in, frankly, an embarrassing way, and you should not just believe reports you read in theFin Review front page or the Australian.
Senator BIRMINGHAM: Minister, again, thank you. Has Ms McKenna or Mr Quigley sought any correction from theAustralian for the erroneous story that you have cited?
Senator Conroy: Seeking a correction from the Australian is like looking for the Loch Ness monster. They are unashamed in their biased reporting and their campaigning against the Labor government and the National Broadband Network. They are unashamed in their campaigning.
Senator BIRMINGHAM: How has the board, since Ms McKenna became chair, reinforced to management their accountability to the board? Have there been any particular changes in the way management is expected to present their accountability to the board under Ms McKenna?
Senator Conroy: I am happy to take on notice—
Senator BIRMINGHAM: Why won't you let Mr Quigley actually answer that?
Senator Conroy: I am sorry. If you want to ask about the board, you are asking me.
Senator BIRMINGHAM: No, this is a management question, Minister.
Senator Conroy: It is not.
Senator BIRMINGHAM: It is a management question.
Senator Conroy: I have said I am happy to take that on notice.
Senator BIRMINGHAM: Why won't you let Mr Quigley speak for himself?
Senator Conroy: You are asking board related questions.
CHAIR: Senator Birmingham, you know the rules. Once the minister takes it on notice, he is entitled to take it on notice, and you should not berate him after that. You should get on and ask another question. You know the rules.
Senator BIRMINGHAM: Mr Quigley, have you changed the way you present information to the board since the change of chair?
Senator Conroy: What the board requires of Mr Quigley is a board matter and I am happy to take on notice your question.
Senator BIRMINGHAM: You are not Mr Quigley.
Senator Conroy: I am entitled to take any question put at estimates. It is the rules of estimates. I am entitled to take on notice any question you may put.
Senator BIRMINGHAM: You make a mockery of estimates with your approach, Minister.
Senator Conroy: You are a mockery and a travesty for simply trying to engage in smear of the National Broadband Network and the company and the professionals at it. You are regurgitating a range of false claims simply for your own political gain to smear the professionals who work at the NBN Co.
Senator BIRMINGHAM: Mr Quigley, I would like to ask about the take-up rates.
Senator Conroy: If you want to ask about even the delayed rollout and where it is up to, any time you want to you can pitch a question about the NBN Co. but sitting and regurgitating false claims—
Senator BIRMINGHAM: I am on this side of the table. I get to choose the questions.
CHAIR: As you are aware, Senator Birmingham, the minister can also choose whether he takes questions on notice or how he answers those questions.
Senator Conroy: Just in case you are under any doubt—
Senator BIRMINGHAM: He is more than able to answer the questions.
Senator Conroy: I have full confidence in Ms McKenna, the board and Mr Quigley and the executive, in case you have got any doubt or want to regurgitate any of the other false claims that you have seen printed over the last month or so.
Senator BIRMINGHAM: Mr Quigley, have you changed the presentation of management reports to the board since Ms McKenna?
Senator Conroy: I have already taken that question on notice as I am entitled to. Would you like to ask another question?
Senator BIRMINGHAM: Has Ms McKenna discussed Mr Quigley's performance at all with you, Minister?
Senator Conroy: I am sorry, but I am really not going to answer questions about private conversations. Let me repeat what I have just said just in case there is any doubt whatsoever, Senator Birmingham. Mr Quigley has my full confidence as does Ms McKenna and as does the board. Could I be any clearer or more succinct? Any time you would like to ask about the NBN, the rollout, the take-up rates or anything to do with it, you just fire a question away. You just keep trolling through the rubbish.
Senator BIRMINGHAM: Any time you would like to stop—
Senator Conroy: You just keep trolling through the rubbish. Take the opportunity to ask a question about the rollout, you go right ahead.
Senator BIRMINGHAM: Any time you would like to stop the effective conduct of these hearings by simply letting Mr Quigley answer—as I am sure he is most capable of doing—a very simple question about the way his management team reports information to the panel—
CHAIR: I have already ruled on that. You cannot try and overrule a minister if the minister takes the questions. You know the rules. You should stop ignoring the rules of the operation of estimates and you should ask questions of Mr Quigley or Senator Conroy but the minister can take any question he likes.
Senator BIRMINGHAM: Has Mr Quigley had a performance review since Ms McKenna was appointed?
Senator Conroy: I will take that on notice. I would expect that all executives of NBN Co. go through performance reviews.
Senator BIRMINGHAM: But Mr Quigley, have you had a performance review—
Senator Conroy: Excuse me. No, you do not get to ask Mr Quigley about performance reviews. That is ridiculous. I have taken the question on notice.
Senator BIRMINGHAM: I am not asking him about what the outcome was. I am asking whether it happened or not. The person sitting to your right would know whether it happened or not.
Senator Conroy: In any professional organisation, as the NBN Co. is, all staff have performance reviews. As to whether one has happened since Ms McKenna took over, I will take that on notice and get back to you.
Senator BIRMINGHAM: Minister, you could turn to your right and ask Mr Quigley and he would give you an answer instantly. There is no need for you to take this question on notice.
Senator Conroy: I have taken it on notice.
Senator BIRMINGHAM: What is you reason for taking this question on notice?
CHAIR: The minister is not required to answer that question.
Senator Conroy: Because I want to get an accurate response from Ms McKenna.
Senator BIRMINGHAM: You do not think that Mr Quigley would give you an accurate response?
Senator Conroy: He may or may not have had one.
Senator BIRMINGHAM: He would know.
Senator Conroy: I will get you an accurate answer, Senator Birmingham.
Senator BIRMINGHAM: Mr Quigley could give you an accurate answer.
Senator Conroy: I will give you an accurate answer when I answer the question on notice.
Senator BIRMINGHAM: The person who could give you an accurate answer is sitting immediately to your right. You would give the accurate answer right now if you chose to do so, Minister.
Senator Conroy: As I have said already, just in case you are under any doubt—
Senator BIRMINGHAM: You are not taking questions on notice because you do not know or cannot get the answers; you are taking it on notice because you do not want to give us the answers.
Senator Conroy: Ms McKenna, the board and Mr Quigley have my full support. I repeat: every member of staff of NBN Co., as a professional company, would have performance reviews at various stages. I will take on notice the specific question that you have asked.
Senator BIRMINGHAM: Why won't you simply turn to your right and find out the information and answer the question, as you could very easily do?
CHAIR: Senator Birmingham, do you have any other questions? If you do not have any other questions, I am happy to put a range of questions to the minister and NBN Co.
Senator BIRMINGHAM: The list of board appointment for the department indicates that Mr Quigley's term as a director was extended until 2016.
Senator Conroy: He was reappointed, not extended—whatever the formal words are.
Senator BIRMINGHAM: Indeed. Was this a reappointment as an executive director on the NBN Co. board or was it an extension of his contract as chief executive?
Senator Conroy: I will defer to the exact legal definition.
Mr Clarke : And I will make sure that I give an accurate answer. I am advised that it was a reappointment as a board member.
Senator BIRMINGHAM: When does Mr Quigley's appointment as chief executive require reappointment.
Senator Conroy: For accuracy—and I am not trying to be difficult, Senator Birmingham—I am happy to take that question on notice. We do not know the answer.
Mr Clarke : It is in fact a matter for the board.
Senator Conroy: It is a matter for the board, so I will happily ask Ms McKenna. I will take that on notice.
Senator BIRMINGHAM: Once again, I am pretty sure that Mr Quigley would know when his contract is up.
Senator Conroy: I want to make sure that I get you an exact date.
Senator BIRMINGHAM: I am quite happy with a year.
Senator Conroy: I would rather give you the exactly correct answer, Senator Birmingham.
Senator BIRMINGHAM: What year does Mr Quigley's appointment as chief executive—
Senator Conroy: I have no idea. I will get the exact answer for you, Senator Birmingham. I do not know the answer to the question.
Senator BIRMINGHAM: Once again, the gentleman sitting to your right does, I am sure.
Senator Conroy: I have taken it on notice.
Senator BIRMINGHAM: I am sure that Mr Quigley knows. You are making an absolute mockery of proceedings with that approach, Minister, and you are not helping Mr Quigley in that, either, who I am sure can answer the questions.
CHAIR: Have you finished, Senator Birmingham? Do you have more questions, Senator Birmingham?
Senator BIRMINGHAM: Yes, I do. Minister, are you aware as to whether Ms McKenna has sought the support of the board or you to appoint herself as executive director?
Senator Conroy: I repeat: you really should not listen to gossip from journalists from the Financial Review. It really is sad.
Senator BIRMINGHAM: Is that a no?
Senator Conroy: It is a category no. I repeat: you should not keep listening to your cheer squads. That is a complete fabrication.
Senator BIRMINGHAM: Minister, did you participate in a meeting with Ms McKenna and Mr Quigley on Wednesday 22 May at the NBN offices in North Sydney?
Senator Conroy: I have a weekly meeting. It is sometimes in person; it is sometimes by phone. I do not think that we have used a videoconference facility yet. I have weekly meetings to stay across the processes of the NBN Co.
Senator BIRMINGHAM: Did you attend a weekly meeting at the NBN Co. offices on Wednesday 22 May?
Senator Conroy: That may have been when one of our meetings was, yes. But if you are going to ask me next what happened, I have to say the same thing: you have to stop believing what you read in the Australian and in the Financial Review. And I am certainly not going to divulge the contents of a private meeting between the chair, the CEO and I. If your next seven questions are down that burrow, it is empty.
Senator BIRMINGHAM: Minister, can you give a simple assurance to the estimates committee that that meeting was not to discuss the relationship between Ms McKenna and Mr Quigley.
Senator Conroy: I can give you a guarantee that my meetings discuss the ongoing meeting of the statement of expectations that the government shareholder has given to the NBN board and management.
Senator BIRMINGHAM: Will you give the estimates committee a guarantee that—
Senator Conroy: I will give you a guarantee that Mr Quigley, Ms McKenna and the board have my full support.
Senator BIRMINGHAM: Does Mr Quigley have Ms McKenna's full support?
Senator Conroy: You really have to stop peddling gossip.
Senator BIRMINGHAM: We wrote to Senator Cameron asking whether Ms McKenna could attend today so that we could get some clarification of these issues from her directly—
Senator Conroy: I understand that you suddenly decided to start inviting everybody in the world—
Senator BIRMINGHAM: but Senator Cameron declined to invite her.
Senator Conroy: that you want. There has been no history in the 17 and a bit years that I have been coming to Senate estimates of chairs coming. Sometimes the chair can be the acting CEO or vice-versa, but that is the only example. Under your government, CEOs did not even come. Mr Graeme John, CEO of Australia Post, never attended—never.
Senator BIRMINGHAM: He never attended while you were minister, either.
Senator Conroy: Mr Fahour has.
Senator BIRMINGHAM: Mr Fahour has, yes. It is a credit to Mr Fahour. But Mr Johns, for the years that he remained CEO when you were still minister—
Senator Conroy: Let us be very clear: Mr Chapman, the CEO of the ACMA—although they have a combined position with the chair; Mr Scott; even Robert Lomdahl, who has just started at TUSMA; and Mr Quigley all attend regularly. If you have any questions about the board or Ms McKenna, they come to me. You have to stop believing every bit of trash gossip that masquerades as journalism in this country. Would you like to ask about the NBN rollout? Anytime you want to chance your arm, we have the answers for you.
CHAIR: Senator Conroy, can I for the record indicate that the committee made a decision in relation to the request for an invite and the committee continued to apply what has been the longstanding practice, which is that we do not have chairs of boards at estimates hearings.
Senator BIRMINGHAM: The committee along party lines, Senator Cameron. Minister, you will not take the opportunity tonight to make clear that your meeting at the NBN Co. offices last Wednesday did not involve discussions about Ms McKenna's relationship with Mr Quigley.
Senator Conroy: I have. My discussions every week are around the NBN Co. performance in meeting the statement of expectations and all matters that bear on it.
Senator BIRMINGHAM: Which would include the functionality of the relationship between the chair and the CEO.
Senator Conroy: What it does not include is the dysfunctionality of the questions that you are asking.
Senator BIRMINGHAM: Again, you are drawing this out, Minister.
Senator Conroy: I am not going to discuss with you my private conversations. But I have been very clear. For at least the fifth time now: Mr Quigley and Ms McKenna and the board have my full support. It is working hard to turn around the challenges in the construction rollout. Any time that you would like to ask how that is going, Senator Birmingham, you would distinguish yourself—as opposed to the smear and trash and much that you are engaged in at the moment.
Senator BIRMINGHAM: It is not your confidence that is at question here, Minister. You have done nothing tonight to settle any of the issues.
Senator Conroy: Do not try and put words in my mouth or anybody else's based on the trash you are spreading tonight.
Senator BIRMINGHAM: I am not putting words into your mouth.
Senator Conroy: You have just attempted to put—
Senator BIRMINGHAM: Your failure to answer questions—
Senator Conroy: words in my mouth and I will not allow you to do so and not respond.
Senator BIRMINGHAM: has done nothing to settle things.
Senator Conroy: Are we really clear about that? You are not going to get away with smearing.
Senator BIRMINGHAM: Nothing is going to stop you talking when you want to talk, Minister. I am well aware of that.
CHAIR: Thank you, Senator Birmingham. Mr Quigley, I want you to come back to slide 2, the brownfields activity profile. Could you explain the various aspects of this graph so that I can understand it a bit better. We are better off doing this than continuing this speculation and nonsense that we have had for the last period of time.
Mr Quigley : This was put in place to give the committee a view of how the process runs for brownfields and then on page 3 for greenfields or new developments and the various steps in the process. As we have mentioned several times, in a project of this magnitude it takes some time to get the supertanker out of port and steaming ahead. That is what you can see from left to right as we go through the various stages. The focus has been for some time on the premises passed. As you can see, there is a fairly steep ramp there up the end of June. As everybody in the room knows, it has not been easy to get the construction completely bedded down to make sure that we can get premises passed. But we are making good progress on that. As you can see, we have continued to show an estimate of between 155,000 and 175,000 premises by the end of June, which are the numbers that we had some time ago. We are still staying with those numbers.
CHAIR: Is that significant increase between April and June what you have been describing as the ramp up?
Mr Quigley : Yes. That will continue after that. I might have said in the committee meeting before that every large endeavour that I have ever been involved in, whether it is starting up a factory—and we built one here, an optical submarine cable factory, many years ago—there is the same issue: it takes some time to get the things that we have learnt into the system and to ramp things up. But once it gets going, it starts to fire. As you can see, if we get to the number that we have set ourselves—and we are sticking by that number—we will be well on the way to getting this machine humming.
CHAIR: What are the specific factors that have resulted in this ramp up over that three-month period?
Mr Quigley : There has obviously been a huge amount of work that has gone into the preparation. There are various stages of the civil works that go into doing the ducting. I am talking about the very last stage there. There is obviously a bit that precedes that where we do top level design, our partners do a detailed design and Telstra remediation is done. Where there are no Telstra ducts or they are not fit for use—they are too congested or full—we may put in new ducting. That means that we, through our construction partners, may have to bore or trench. We haul fibre into those ducts. This could be sizeable fibre, all the way from 144 fibre cables to 576 fibre cables and sometimes even more. You then haul those, splice them, test them all and bring the systems into activation. You have to have all of the electronics in the FAN sites. That is work that is not very visible, because it happens in exchanges. But all of that work is there. Then you have to connect the FAN sites to the points of interconnect; that work is also going extremely well. All of those things that have been going on in the background have all come together so that we can climb up that ramp over the next few months.
CHAIR: I was out at the rollout of the fibre network in Windsor and I had a look in the pits. The pits are pretty congested with what I thought was decaying copper. Is that pretty typical?
Mr Quigley : It varies across the network. Some of the copper is obviously quite old and some of it is more recent, but there is a variety of things you find in the pits.
CHAIR: A variety of things; I do not want to go there! On the new developments, this is an area that has attracted a bit of attention over the last period. What has been the difference in the ramp-up over this last period?
Mr Quigley : First of all, it was a tough job to do, the greenfields rollout. It was anywhere in the country that a developer requested we go, and there has been a lot of work that has gone into making sure we could meet the needs of the greenfields policy that the government set for us. It is now humming along quite well. As you can see there, in the premises or lots past together with the premises activated you can see the ramp is quite clear. We continue to work hard on making sure that everybody who moves into a new development has a service when they move in. That is a very tough job to do, by the way; even existing telcos cannot necessarily guarantee that that will happen. That is a metric that we watch carefully. We try to make sure that everybody who moves into a new development can get a service turned on as rapidly as possible.
CHAIR: And the take-up rate looks very impressive, actually.
Senator BILYK: Perfect.
CHAIR: How does this compare internationally?
Mr Quigley : From all the benchmark we have seen this is really quite dramatic. Mr Steffens came across from BT, so he knows the European scene reasonably well. How would you describe it?
Mr Steffens : We continue to benchmark financially on a regular basis. We met with a colleague only last week from the supply side who is talking to many operators across the world. Fifteen per cent is often seen as a very good take-up, and we are substantially above that.
Senator Conroy: I think the NBN executives are being far too bashful. I should add to the answer substantially. The take-up rate for fibre connected for 12 months or more is about 35 per cent. For areas connected for six months or more it is around 30 per cent. Compare this to, say, ADSL when it was introduced in 2006, where the ABS found that 28 per cent of households had broadband six years after its introduction. In other words, NBN Co. has achieved with fibre in six months what it took six years to do with ADSL and HFC. In individual areas the picture is even more remarkable. We are at 63 per cent take-up in Willunga, one of our second-release sites—
CHAIR: I think you have mentioned Willunga before.
Senator Conroy: and 64 per cent in Kiama. At some point you might think, 'No, it'll slow down,' but even in Senator Birmingham's home state there is a 63 per cent in Willunga, 64 per cent in Kiama and, in an area of Gungahlin—we call it FSAM 6—called Crace more than 46 per cent of households in the footprint have signed up to take the NBN in just over four months. In another area of Gungahlin that we refer to FSAM 1 more than 34 per cent of households in the footprint have ordered a service in under two months.
Just to confirm what Mr Steffens was saying, I was in Clayton last week at the opening of Corning's, who supply fibre, new manufacturing facility which is scheduled to grow to 400 jobs with an extra 250-plus new jobs at their factory in Melbourne. Corning's executive vice president Clark Kinlin went out of his way to make the point that NBN Co's fibre take-up rates are world records. I will just repeat that for Senator Birmingham's sake: NBN Co's fibre take-up rates are world records. And it is easy for any reasonable observer to see why this is. Fibre is the best broadband access technology available anywhere in the world and retail services on the NBN are available for comparable prices and, in many cases, cheaper prices than is currently available on ADSL and HFC. So, Senator Cameron, Australians want this service. They want the best broadband access technology available and they want it at the prices available on the National Broadband Network.
CHAIR: On the take-up rate, is there an expectation that once we have no competition amongst the retailers, that packages of services available will continue to attract a higher density of take-up rates?
Senator Conroy: I do not think it is relevant if there are not a lot more players are in the market yet. Even Optus are really just beginning to do some serious marketing. Dodo have not yet entered the market and TPG have not yet entered the market. Dodo and TPG would be, if you like, the cut-price companies in the past. So there is more competition to come on the National Broadband Network, but I think you can look at those price comparisons that were there—
CHAIR: I was going to get to that.
Senator Conroy: I do not want to steal Mr Quigley's thunder, or anybody else's, but I am on a roll, so tough! If you look at those prices over each price per gigabit per month you can see that NBN's products are cheaper than ADSL products, even into the higher usage 100 gigabit per month packages. You can see that their retail competition and the ACCAN report, which looked at the Brunswick area which had been going for over 12 months, found that 70 per cent were paying the same or less for their broadband packages, Senator Cameron. ACCAN is a consumer movement in the telco area. The remaining 30 per cent had chosen to take a higher, bigger package because they had a choice for the first time to take those sorts of packages. What we are seeing is that competition has already started to kick in. We expect the entry of some of those other large companies to increase that competitive pressure.
CHAIR: In some of the other more mature NBN markets overseas—I am not sure, Mr Steffens, if you are the person we can talk to about this—the packages that are in place, as I understand it, are packages of news services, television, apps, and a whole range of issues including health support. One of the things that has been exercising my mind, and I am not sure if you or Senator Conroy have a view, is that it will create another significant source of competition for the existing media players. I wonder if the over-the-top reaction from some of the existing media players towards the NBN is nothing more than vested interests.
Senator Conroy: I do hear that said occasionally. I think, frankly, the reaction from The Australian is purely ideological bile. They are opposed to government enterprise. They are opposed to the concept of a natural monopoly—though they have not minded Telstra having a natural monopoly on copper for 100-odd years. To be fair, I think the former CEO of Foxtel always had the view that Foxtel would be one of NBN Co.'s biggest customers. But, yes, there is no question that other internet protocol TV companies would possibly come in. Fetch TV are a company already established in Australia. But, to be fair, I suspect it is more to do with ideological prejudices than other issues.
CHAIR: Thank you. I might explore this a bit further, but we will suspend now for a committee meeting to deal with some legislation committee work.
Proceedings suspended from 21:00 to 21:20
CHAIR: Senator Birmingham.
Senator BIRMINGHAM: I go to the rate of rollout for the fixed wireless service. Can you give us an update on the extent of construction in the fixed wireless service to date and how that is tracking against targets.
Mr Quigley : I probably should describe what the build is. There are different components of it, as you would know. The first step is you have to obtain spectrum. Then, after you have done the planning, you have to locate a site on which either to build a tower or to use a tower that already exists. We call those brownfields towers or greenfields towers, and the rollout is a mix of both. Then there is getting all of the equipment onto the tower, getting all the centralised equipment and getting all the links back to the same points of interconnect that are used for the brownfields and the greenfields rollout. In the brownfields all of that can come together at the end. It tends to go in waves. You do a set and then you move on to the next one. So we are expecting to see that come up substantially in June as we are seeing in brownfields. Greenfields tend to be more on a regular basis. What we are going to see is an increase as we get towards the end of June.
As you probably well appreciate, we have had some issues with tower locations. It has not always been easy. We are discovering all around the country that the process of putting up any new tower—and these are exactly the same towers you need for mobile services—is quite a task. It is not like it used to be; it is much more difficult than it was when the original towers were put up for the first- and second-generation—
Senator BIRMINGHAM: Aren't you grateful you don't have to put wind turbines on top of them!
Mr Quigley : I can imagine! So that is an issue. The other thing we have to deal with in the fixed wireless area is the numbers of premises in rural areas where the fixed wireless goes. Those uncertainties for counting premises in the databases are exacerbated in rural areas. They are less accurate in rural areas than they are in urban areas, so the number of premises covered when you put up a tower is subject to some variation. But those two effects, as well as the fact that you have to think about interference issues and vegetation—the fact is that radio technologies are somewhat less certain than fibre.
Senator BIRMINGHAM: Are you able to give the committee the most recent data, whatever the reporting date is, that you can apply to the number of premises you believe to have covered and connected by wireless and noting the certain areas of doubts that you indicated?
Mr Quigley : The total number of premises covered at the last month ran, I think, a little over 17,000.
Senator BIRMINGHAM: Seventeen thousand covered as of the end of April or something?
Mr Quigley : Yes.
Senator BIRMINGHAM: Okay. And connected?
Mr Quigley : I think we are probably around 1,700 activated at this stage.
Senator BIRMINGHAM: Thank you. What are the current targets for coverage by end of June?
Mr Quigley : I think we explained this to the committee before. Because of the issues I have just talked about, it is the case that sometimes when you go to put a fixed wireless service in—and certainly Mr McLaren, our CTO, at the end of the table here, can tell us a little more—even in a premise where you assume you can put in a fixed wireless service, when you get there, you find that you actually cannot get the performance that you expected to get. It is radio technology; it could be due to vegetation. Then you have to say, 'We are going to have to serve this premise with a satellite service.' Do you want to elaborate, Gary?
Mr McLaren : Certainly. With fixed wireless we clearly work to be able to make sure our product achieves its objectives. We are now selling 12 megabits per second, but very soon it will be upgraded to 25 megabits per second, so we will need to make sure that all of the signal strengths are available to be able to make those services work to that standard. When we put an installation into a premise we check for that signal strength. We have always expected there will be some areas, mainly due to vegetation—trees and the like—that will cause those installations to not be able to pass through that qualification step and we will have some that we will not be able to fulfil.
We are seeing those being slightly higher than we would have originally expected. We believe that could be because a lot of our services are currently in the Ballarat region, which is a region in Victoria on the Great Dividing Range. It is heavily forested and we are dealing with quite a lot of forest and vegetation. That means that we are having to take that order and park it for our satellite service, when it is available, to be able to deliver those services. That is what Mr Quigley was referring to in terms of being able to service the premises and some of the uncertainties around it.
Mr Quigley : For that reason, we are now tending to look at combined satellite and fixed wireless together. We have to have some flexibility between those areas to make sure we can serve everybody.
Senator BIRMINGHAM: I appreciate that, Mr Quigley, but you have given me an indication that at the end of April you had covered around 17,000 premises. The revised corporate plan indicated that, by the end of June, you are looking to have a coverage of around 320,000 premises by wireless.
Mr Quigley : No.
Mr Quigley : No.
Senator BIRMINGHAM: Sorry, wireless and satellite. I apologise.
Mr Quigley : Yes.
Senator BIRMINGHAM: What will the coverage for wireless and satellite be and how does that apportion—as best you can—noting the giving of a figure of having covered 17,000 by wireless? How will that apportion by June 30 to the wireless target?
Mr Quigley : This is one in which I think we would be better to wait until we get to June to report on what the actuals are. It is a bit like greenfields; it is dependent on parameters which are very difficult for us to control. All I would say to you is that we are working hard to make sure that, for anybody who needs a service—given the limitations that we have got on the interim satellite at the moment—we try and fulfil that service. But I think it would probably be better, in the circumstances, to keep giving you the updates, and we will report at the end of June what the mix is between wireless and satellite.
Senator BIRMINGHAM: In answers to previous questions on notice, you flagged that the satellite capacity provides coverage for about 250,000 premises. Is that correct?
Mr Quigley : That is correct. By the way, that number is supplied to us by the department based on the guidelines and rules in terms of those people who are eligible. Obviously, the satellite footprint covers many more people, but that is the number of people who are eligible under the rules that are in place from DBCDE.
Senator BIRMINGHAM: Yes, I appreciate that obviously the satellite footprint covers a lot more. For the purposes of trying to segregate your corporate plan targets, I understand how you are tracking toward 17,000. I appreciate fully that when you flick the switch on a new wireless tower, that is a big new lot of numbers that you add in one hit. So I do appreciate the context in which you put your answers and that there may well be a significant ramp-up over May and June in getting towards a figure. But, if 250,000 is the satellite coverage and 320,000 was the combined satellite wireless target in the revised corporate plan, is 70,000 still what you are working towards in terms of premises covered by wireless?
Mr Quigley : No. For the reasons I have mentioned to you—vegetation reasons and the issue of what I call the G-NAF counts; that is the number of premises in a particular coverage area—we have had to correct and we are continuing to correct. So the number we will actually reach is somewhat variable. The reason it is so difficult to predict is we can put a tower up but then we have to count the number of premises in there, and this is an area in which the G-NAF data is not as accurate as it is in the city. That is why I think we would be better placed to keep reporting each quarter, as we are doing, on where we are up to. In other words—
Senator BIRMINGHAM: So you do not expect to make the 70,000?
Mr Quigley : What I am saying is it is very difficult—
Senator BIRMINGHAM: So you do not expect to make 70,000 but you do not have a revised target?
Mr Quigley : We do not know. Until we have finished the counting—in fact, this is one of the things I guess we have learnt in this, Senator. We probably should just say that some of the things are very difficult to predict. This is the plan of what we going to do. I think we are putting up, largely, the number of towers that we intended to put up in this period. The question is: how many premises can you end up covering?
Senator BIRMINGHAM: That was my next question: how many towers do you now have operational to cover those 17,000 premises?
Mr Quigley : I do not have that number. I do not know if you do, Gary.
Mr McLaren : It is in the region of approximately 70 to 80 towers at the moment.
Mr Quigley : Live.
Mr McLaren : Live, actually covering, in operation at the moment.
Mr Quigley : And this is something that has quite a long pipeline. As you are probably aware, you can have issues getting approval to put towers up—
Senator BIRMINGHAM: I think we have discussed some of those issues previously.
Mr Quigley : and, in some cases, the tower that you may be held up on is what we call a relay, which means it is serving other towers. So it can have a significant effect.
Senator BIRMINGHAM: How many towers do you anticipate being able to bring to live status over the next couple of months?
Mr Quigley : By the end of June—would you know roughly, Gary?
Mr McLaren : No. We still obviously have the program. As you were saying, there are a number of issues that we still need to make sure we have, in terms of sign acquisition, construction and the like, to be able to deliver an exact figure on towers.
Senator BIRMINGHAM: Acknowledging what you could call the premises-level issues with towers and their coverage, is the rest of the rollout of the towers proceeding as planned? So, in terms of the actual construction and getting them on the ground at the speed that you envisaged in the corporate plan, are you getting the relevant infrastructure to get to them, to get them built, to get them connected and to get them switched on according to plan?
Mr Quigley : Yes. Generally, I would say that all the transit networks are going pretty well.
Mr Steffens : Obviously, with every individual project you may or may not encounter issues, but on balance we are quite comfortable with the rollout.
Senator BIRMINGHAM: Okay. So you believe that, notwithstanding 17,000 being the figure at the end of April, by the end of June—acknowledging that it is hard to count—you are going to be close to your 70,000 somehow?
Mr Quigley : No, I would not say that. This is an area in which I think we have to just advise the committee as we get closer to the end, for all the reasons we have said. We may need that flexibility between the different technologies. As we said, if we hit an area like Ballarat, where there is quite dense vegetation, our first priority is to make sure we can give people a good service. So this is not a 'best effort' service; this is where, when we say we are going to put in a fixed wireless service or a satellite service, we want to make sure that we can provide them with 25 meg down, five meg up at the ethernet layer.
Senator BIRMINGHAM: How are you going to address the effect that these complications you are facing, in terms of dense bushland et cetera, will have on the nature of your build? Will you have to build more towers to address the gaps or will you have to put more people on satellite, or both?
Mr Quigley : We have a variety of technologies that we can use, obviously. We are using three technologies, which is fibre, fixed wireless, satellite. The boundaries are obviously, as we have talked about, quite difficult to be quite precise about at this point in time. So it could be that an area we anticipated doing with fixed wireless we may have to do with fibre. That is a possibility.
Senator BIRMINGHAM: But terms of the experience at present, as you are now switching on and finding that you are not covering the number of premises you would hope to cover from a tower that you switch on, the solutions for those premises might be fibre, depending on their locality, I imagine.
Mr Quigley : Yes. It might be satellite.
Senator BIRMINGHAM: It might be satellite. How does this change the cost and configuration in metrics for the project overall?
Mr Quigley : We do not expect it to have any significant effect overall on the project.
Senator Conroy: The satellite has always been a flexible number. Seven per cent has always been 3:4—4:3. There has always been a movement there simply because it is impossible to actually estimate. So the seven per cent is usually talked about as three per cent satellite, four per cent fixed wireless, but also the other way round. It moves just simply because of the metrics that you have just been talking about.
Mr Quigley : It is the nature of radio technology, largely.
Senator BIRMINGHAM: There is a capacity to the interim satellite, though, isn't there? There is a capacity to every satellite, but you are going to hit up against the capacity on the interim satellite, won't you?
Mr Quigley : Our planning base is on the long-term satellites. We are getting closer to 2015, when those satellites will be in orbit.
Senator BIRMINGHAM: The media release that went out with your March-quarter rollout update indicated your fixed wireless coverage for premises or lots as being 17,300. So, in April, no projects came to completion?
Mr Quigley : Yes, as we said, it is the nature of it. You are doing a bunch of them; they get done. That is what it is saying: it will increase by the end of June but it is relatively static for a month or two.
Senator BIRMINGHAM: Can you give me any ballpark estimate of how much it will increase by the end of June?
Mr Quigley : I think we can advise that when we get closer to that date.
Senator Conroy: That it is not quite as simple as flicking a switch, Senator Birmingham, is the point that I think is being made.
Senator BIRMINGHAM: I am quite confident it is not, Senator Conroy, and I am being very understanding of Mr Quigley's explanations as to why—
Senator JOYCE: You can flick the switch but no-one is connected to it.
Senator Conroy: You can press the buttons, Senator Joyce.
Senator BIRMINGHAM: There are plenty of switches and buttons.
Senator BIRMINGHAM: I can quite understand Mr Quigley's explanation as to why it is hard to put a firm figure on premises numbers until you do the count at the end. I would think that having an expectation of how many towers would be completed and activated is obviously still subject to getting the work done, but you would have a fairly clear idea of how many towers would be finished and activated by the end of June.
Mr Quigley : We absolutely will have the number of towers—
Senator Joyce interjecting—
Senator Conroy interjecting—
CHAIR: Order! Mr Quigley! It is getting late.
Senator Conroy: Is that a promotion?
CHAIR: Can I say, Mr Quigley, I do see more of you than I see of some other senators, I must say. Senator Conroy and Senator Joyce, if you want to have a conversation, you should go outside and have that conversation.
Senator Conroy: Okay. Let's go!
Senator BIRMINGHAM: It is June in a couple of days, and the end of June is not all that far away.
Mr Quigley : It is not long to wait, Senator.
Senator BIRMINGHAM: It is not long to wait, although I would have thought you would know by now how many towers you might be switching on in the next 32-ish days.
Mr Quigley : What we can say is that there is going to be a substantial increase from the March number to the June number, but this is one that is very difficult to make predictions on. As I said, as we go forward, we will be less inclined to make predictions, given the uncertainties that we have now found in the build.
Senator BIRMINGHAM: Have any been activated during May?
Mr Quigley : I don't think so.
Senator BIRMINGHAM: It is the end of March figure and the end of May figure.
Mr Quigley : I don't think so.
Senator Conroy: It is going to be a big four weeks in June.
Mr Steffens : You also need to understand, as we explained, that the relay sites, where you actually commission towers, would not increase the coverage area, since they are just building up the links. We have towers that are just for transport purposes.
Senator BIRMINGHAM: Thank you. I think Senator Fawcett might have some satellite questions.
Senator Conroy: I am dying to answer some satellite questions!
CHAIR: Yes, I have got some satellite questions myself. I will go to them and then I will come to Senator Fawcett. Minister, I have heard reports that the demand for the interim satellite services is really strong. What is the capacity of the interim satellite? Do we need to have a look at that?
Senator Conroy: This was a matter of some discussion over the last 12 months, and I think at the last joint parliamentary committee we had some particularly uninformed commentary again. So I just thought I would put on the record that demand for the interim satellite has been extremely strong. It is not surprising given the superior nature of the service available compared previous Australian broadband guarantee. But I want to remind you of Mr Turnbull's claim in February last year that the government should not be launching new satellite services. He said, 'There is more than enough capacity on existing satellites to provide broadband services to the several hundred thousand customers in rural and remote Australia.' What a cracker! Clearly this is not the case.
NBN Co. has acquired the vast bulk of cost-effective existing satellite capacity to deliver better interim broadband to 48,000 regional and rural Australian homes and businesses. This compares with hundreds of thousands of homes and businesses which will be served with NBN Co.'s long-term satellite. ISS services were expected to last until late 2014, but the popularity of the ISS means that the orders will reach capacity sometime in early 2014. So NBN Co. is managing the remaining services to ensure that customers without existing access to affordable metro-comparable broadband services receive priority registration for the ISS.
As you would know from the last joint parliamentary committee NBN Co. has investigated options for expanding the available capacity on the ISS. Without going into commercially sensitive information I think it is worth updating the committee because there was a demand from, I think, Mr Hartsuyker that we should just pay no matter what the cost. So I am happy to update the committee. If we were to buy all the remaining capacity on IPSTAR and other satellites we could potentially increase our user numbers to about 75,000. To add about 7,000 new services the cost would be roughly $86 million, to add 17,000 new services the cost is estimated at $143 million and to buy all 27,000 of these services the cost is estimated at $206 million. In terms of what is available, and the cost—and I know Senator Joyce is very interested—
Senator JOYCE: It is vastly cheaper than fibre to the home.
Senator Conroy: Were you out when the shadow cabinet met and said 'Let's borrow $29.5 billion'?
Senator JOYCE: That sounds vastly cheaper than fibre to the home.
Senator Conroy: Did the dog eat your homework that day? Did you not get your shadow cabinet papers?
Senator JOYCE: That wireless service sounds vastly cheaper than fibre to the home. I think you are onto something there: wireless is cheaper.
Senator Conroy: The FTTN that you have signed up to will cost $29.5 billion. The attitude from Mr Hartsuyker and Mr Turnbull is 'buy whatever you need and pay whatever you've got to per customer'. That sort of pricing is very, very, very, very expensive, Senator Joyce. Perhaps you were not listening when I just read those numbers. But I thought it was worth updating because there were some questions around on that at the last committee hearing.
CHAIR: Given that there is a bit of misinformation out there—to put it politely—could you inform the committee of the information that is available to the public and the committee on the rollout generally and the availability of wireless and satellite?
Senator Conroy: Thank you, Senator Cameron. One of the most consistent criticisms that I know you have had to sit and listen to endlessly is that there is more transparency in the Kremlin than there is at NBN Co. headquarters—I am sure you have heard that quip—so I just want to go through in some detail the information that is publicly available. The government and NBN Co. are committed to an unprecedented degree of public transparency on the NBN. Senator Cameron, you would be amazed at the amount of information that is freely and publicly available on the rollout of the NBN if you took the time to look and were not lazy about it—not that I am suggesting you are. Senator Cameron, you have not sat around this table and put your hand out and demanded that all of these questions be answered because, unlike some around this table, you have not been too lazy to go and do the work yourself.
NBN Co. provides monthly updates on the rollout progress on its website. These spreadsheets are called the monthly ready for service report. It lists NBN Co.'s most recent estimates of the status of every single fibre and service module on which construction has commenced, all 401of them; every fibre distribution area to be completed before 30 June this year, all 667 of them; every new development on which construction has commenced, all 861 stages; and every fixed wireless site under construction, of which there are 92. NBN Co. also posts its one year construction schedule, which lists the areas in which construction will commence within a year, and its three year construction schedule, which lists the areas in which construction will commence within the next three years. In addition, NBN Co. posts its proposed footprint list, which lists every address for which services will become available within the next seven months, to assist retail service providers with their planning. NBN Co. also has a mapping tool which shows the network construction status in every part of Australia. The mapping tool includes a searchable list of every retail service provider connected to a particular address and a link to their NBN plans. NBN Co. also provides a list of all 121 points of interconnect and a construction schedule for each of them. NBN Co. also releases updates on rollout progress each quarter, which are available on its website, and provides detailed information on NBN costs and rollout progress every six months in the performance report to the joint committee on the National Broadband Network.
In fact, the deployment information provided by NBN Co. on its website is so comprehensive that a J Xeno, on Whirlpool—and I should congratulate this individual—has created a website called mynbntracker, which enables users to track the detail of the rollout tin their area, all using publicly available data. The website www.mynbn.jxeno.com allows you to enter your location and track all the public information available for your rollout region, including the status of construction process. This is extrapolated from publicly available information on the construction process tabled by Mr Quigley at parliamentary committees, including the expected completion date; the type of deployment, greenfields or brown fields; the name of the fibre serving area model; the name of the fibre serving area; the point of interconnect your area is connected to; the number of premises in your FSAM and FSA; and a list of all retail service providers. It is just remarkable what you can do when you take the time to have a look and do a little bit of hard work. NBN Co.'s website is a good place to start.
And there is an awful lot more information available publicly. GBEs are not required to release publicly their corporate plans but this government has released both NBN Co. corporate plans containing detailed financial and deployment information—once again, on the website. NBN Co. also post on its website its annual reports, which include detailed financial and deployment information. NBN Co. also posts on its website detailed information about its special access undertaking, the wholesale broadband agreement, including related documents such as its network design rules.
NBN Co. executives routinely attend Senate estimates hearings and joint committees, providing detailed information if they are ever asked by any of the opposition senators and literally answer hundreds of questions placed on notice. At the last joint parliamentary committee in April Mr Quigley detailed the cost per premises passed and connected; a detailed breakdown of capital expenditure, including contingencies; a detailed breakdown of operational expenditure; detailed information on pricing, usage and take up; and detailed information across all stages of the construction cycle.
Finally, unlike most incorporated government companies, NBN Co. is subject to the FOI Act and releases information under this act regularly. Also available on its website are the board charter, the audit committee charter, the communications committee charter et cetera. There is a wealth of information on NBN Co. freely available out there for all to access.
Before I finish can I apologise to 'the Monster' for saying gigabit instead of gigabyte. I really find it awful to be described as 'Mr Cobb'—he will understand!
CHAIR: Thank you, Senator Conroy. It is not quite the Kremlin. Senator Fawcett.
Senator FAWCETT: Mr Quigley, could you update the committee on your negotiation with the ITU and other commercial providers about your four orbital slots?
Mr Quigley : I will pass this one to Mr McLaren.
Mr McLaren : First of all, I would like to clarify that we are not negotiating with the ITU.
Senator FAWCETT: Let me rephrase the question. Could you update the committee on your application to the ITU and your negotiations with the other commercial operators?
Mr McLaren : It is not an application. What we do is inform the ITU of the details of our satellite. We put the details on a register that is maintained by the ITU. We actually do that process through the ACMA. The ACMA handles that process for the Australian jurisdiction. The process is effectively a coordination that is done between all operators of satellites around the globe. When we put that filing in place for the ITU we are basically giving notice to the satellite industry that we are going through the process of launching a satellite. We started that process back in 2011. We have updated the ITU, as is the normal process, at many steps along that process. The latest was earlier this year when put what is called the resolution 49 data into the ITU. That is essentially telling the satellite industry that we now have passed critical stages in our satellite development.
We have passed what is called critical design review for the satellite. We have arranged a launch supervisor. As many people would be aware, we are using Arianespace as our launch supervisor. We have put that information into the ITU. That gives the global satellite industry notice that we are moving to a real satellite—we are not a company that has a proposal for a satellite, we have a genuine satellite that we are planning to launch. We continue to coordinate with the relevant operators. The coordination is around the radio frequencies used to make sure there is no interference with any other operators in the vicinity of our satellite. That is progressing well and we have no problems with that. The ITU will be updated as we go through this process. But the actual final notice to the ITU only happens when we have launched the satellite and it is in operation.
Senator FAWCETT: My question goes specifically to your coordination with other operators, particularly around frequencies. Can you give us your schedule with dates on your milestones by which you are anticipating having agreement from other operators for your gateway frequency and upload and download frequencies?
Mr McLaren : We have completed much of the work already with the local operators, particularly the Australian operators. We are continuing that work with other international operators. The exact schedule is something that clearly has been worked through a range of meetings held in many different forms around the world. That is done in international locations where many operators meet on a regular basis to share this type of information. Those meetings extend over a period of years and we are already well into that process.
Senator FAWCETT: That is not the question I asked. I am interested to know the time frame in which you need to reach agreement in order to meet your launch date.
Senator Conroy: I think Optus decommissioned one of its satellites without ever getting final agreement from everybody. You still do not understand the basics
Mr McLaren : Senator Fawcett, I am not sure what you mean by 'agreement'. We are not negotiating any legal contract of any type with any other operator.
Senator FAWCETT: Satellite operators that I have discussed this issue with talk about the design—
Senator Conroy: There is only one satellite operator that you could be referring to—but keep going.
Senator FAWCETT: I will not go there. The process of antenna design and also frequency selection, particularly antenna design, is closely related to the orbital slot which has been decided on as well as your ground segment location. How many design configurations are being held open for you pending your final decision on location in terms of slot and frequency allocation?
Mr McLaren : As I said, we have completed our critical design review. We have a design for the satellite that we are now proceeding with.
Senator FAWCETT: Is it still correct that there are four slots that you have indicated to the ITU you are interested in using?
Mr McLaren : In our filings, we have given notice of four slots—exactly.
Senator FAWCETT: But at this point in time you do not know which two you will end up using for your two satellites,
Mr McLaren : We certainly do know which two are our preferred slots—
Senator FAWCETT: They are your preferred slots but you do not know if they are the ones you will end up actually using.
Mr McLaren : They are intended slots, absolutely.
Senator FAWCETT: They are your intended slots but they are not the ones that you know you will be using.
Mr McLaren : We are proceeding on the basis of using those two slots. If you give me some time, I can give you those slots.
Senator FAWCETT: I do not need to know the actual slots. That level of detail is not appropriate or necessary. The issue is that, if you have not actually firmed up the slots and your antenna design is locked in and you need to use a different slot, what is the degradation in performance for the satellite or what is the cost of holding open the antenna design prior to launch until you have firmed up the slot?
Mr McLaren : We see no reason why we would not be able to use the slots that we are proceeding with.
Senator FAWCETT: Can you table for the committee any advice to that effect from your satellite provider? That is different from advice I have received from other providers—plural.
Mr McLaren : Sorry, from our satellite provider—being who?
Senator FAWCETT: The person you are contracting to build and then launch your satellite.
Mr McLaren : Our satellite manufacturer?
Senator FAWCETT: Yes.
Mr McLaren : We clearly are working with our satellite manufacturer on this whole process. They are in alignment with our view that these two slots that we have designed for will cause us no problem, and we are proceeding on that basis.
Senator FAWCETT: Assuming you actually get to use these two slots.
Mr McLaren : I am not sure what you mean by 'get these slots'.
Senator Conroy: He is trying to imply that the ITU will not grant you permission to use them.
Senator FAWCETT: Minister, do not put words in my mouth. The requirement, as you have indicated yourself, is to get the agreement of other operators so that you do not get conflictions of frequency. You have already indicated that you have not actually got agreement, particularly with the international operators. If you do not get that agreement, then people start looking at other slots.
Mr McLaren : As I said, I am not quite sure what you mean by 'agreement'. We go through a very technical process of frequency coordination.
Mr Quigley : We do not get vetoed. It does not work like that.
Mr McLaren : At meetings which, as I said, are scheduled quite frequently around the world we put the details of our satellite to the other satellite operators, they put the details of their satellite to us and we go through a process that confirms to all of us that there are no problems. That is the process we are on and we are seeing no problems.
Senator Conroy: You do not just get to go, 'I don't like competition, you can't have it.'
Senator FAWCETT: Mr McLaren, could you confirm that your belief is that the allocation of frequency and the relative location of your ground segment and the orbital slot has no impact on your antenna design for the satellite?
Mr McLaren : When you say 'allocation of frequency' are you referring to the allocation that the ACMA makes?
Senator FAWCETT: The frequency you end up having to use to de-conflict with other operators.
Mr McLaren : We have gone through a process with the ACMA. We have the frequencies allocated. We have organised all of the frequencies that our ground stations are using.
Senator FAWCETT: I have no further questions, thanks.
Senator JOYCE: Thank you very much. I just want to go through a couple of things that perplex me about your financial statements 2012. Your total revenue was—
Senator Conroy: Did you really put this press release out on 7 April?
Senator JOYCE: just close to $2 million dollars. Is that correct? You only earned $2 million dollars for the 12e months to 30 June 2012.
Senator Conroy: Your press release says:
The National Broadband Network is truly the Nationals’ Broadband Network as it has been lifted straight from the 2005 Page Research Centre’s position paper …
That is written by you in your press release.
Senator JOYCE: Your travel cost for that year was six times what you earned in revenue.
Mr Quigley : Sorry, is a question there, Senator?
Senator JOYCE: Yes.
Senator Conroy: It is an infrastructure build. You have to build the infrastructure first.
Senator JOYCE: Was has been your telecommunications revenues thus far this year?
Senator Conroy: Thus far this year or on the last report?
Senator JOYCE: Why don't you answer the question? You are the genius behind the next budget nightmare. Tell me: how are you going this year? How much have you earned?
Senator Conroy: Did they not tell you: you are borrowing $29.5 billion for your FTTN.
Senator JOYCE: Chair, can I get an answer to the question, please?
Senator Conroy: Did they not tell you that? Were you out that day?
CHAIR: Senator Conroy, allow Senator Joyce to ask the question.
Senator JOYCE: I noted in the last year's financial statements that the telecommunications revenue is just shy of $2 million, yet the travel expense is in excess of $12 million—six times, actually, what you have earned. In your current revenue projections, are you on target? What is your current revenue projections, year to date, as we speak?
Mr Quigley : What I can tell you, is we are slightly ahead of our revenue projections. As you would understand, when you are building an infrastructure project such as this, you spend a fair amount of money upfront as then, as you connect customers, the revenue grows. That is what most business—
Senator Conroy: Did you know Telstra built and paid for their towers for 4G before they had a single customer?
Senator JOYCE: I know you are nervous about the next budget nightmare. If you are a competent hand at the tiller here, Minister, you would be able to tell me the revenue you have received, year to date, as to where we are at the moment. So what is it?
CHAIR: I do not think we should play silly games.
Senator JOYCE: This is a very serious question. What is your revenue, year to date?
Senator Conroy: I believe Mr Quigley just answered your question.
CHAIR: Senator Joyce, do not play silly games.
Senator JOYCE: He said it was ahead of forecast, but he did not tell me what it was.
Senator Conroy: Are you still trying to work out the difference between gross debt and net debt? Are you still struggling on that?
Senator JOYCE: You are under the pump, aren't you?
Senator Conroy: I see sweat on your forehead. That Tony Windsor has got you spooked. Armadale is not as friendly as you thought.
Senator JOYCE: This is as close as I have ever been to a circus, watching you.
Senator Conroy: Have you got a question that makes sense?
Senator JOYCE: I want the answer to this question; I really do.
Senator Conroy: We can take it on notice for you. Fire away.
Senator JOYCE: I just asked \the question. You cannot answer it?
Senator Conroy: We will take it on notice.
Senator JOYCE: So you do not know the answer?
Senator Conroy: We will take it on notice.
Senator JOYCE: Last year I noticed that you had close to three quarters of a billion dollars in cash and equivalents. What are the current cash and equivalents that you have on hand? Why do you have so much cash and equivalents on your balance sheet?
Mr Quigley : Currently have around $1.5 billion in cash on hand.
Senator JOYCE: Why?
Mr Quigley : That is something we are discussing with the government, to optimise that, in terms of looking at the usage and the equity injections. That is going through a process at the moment.
Senator JOYCE: Why do you need so much cash on the balance sheet?
Senator Conroy: That is, as he said, a question that we are discussing with the government at the moment. At the end of that the relatively straightforward position is: because the rollout has not proceeded as fast as was originally forecast. We would have transferred cash on the basis of the original forecast, and there is an accumulation.
Senator JOYCE: So you have got the cash as per budget, but the reality is that the rollout is not nearly as quick?
Senator Conroy: That is why we are having a discussion about how much cash they need on hand. That is the point that Mr Quigley has just answered.
Senator JOYCE: Do you acknowledge that is way in access of what would be the norms in a business like this?
Mr Quigley : I think, for an infant, no.
Senator Conroy: I do not think anyone has a national broadband network in the way we are doing it.
Senator JOYCE: On that point, I agree with you entirely. No-one.
Senator Conroy: You said, in your press release, that this was your idea. You said it is the Nationals' broadband network.
Senator JOYCE: Where have you got that money? It is the nation's money. Where have you got the nation's money invested?
Senator Conroy: The nation's money!
Mr Quigley : In a variety of banks. They are all AA plus rated.
Senator JOYCE: What sort of return are we getting on that?
Senator Conroy: I would have to take that on notice. I am sure Mr Quigley does not have it handy.
Senator JOYCE: Would it be the case that currently the return you are getting from your money invested is probably in excess of what you are actually earning from the company?
Mr Quigley : In terms of revenue?
Senator JOYCE: Yes.
Mr Quigley : Almost certainly, yes.
Senator JOYCE: So you are making more money as a bank than as a telecommunications company at the moment?
Senator Conroy: That is what happens when you are doing a start-up infrastructure project; Senator Joyce, you are a genius! Give the man a beer! You should take up accounting!
Senator JOYCE: In any other business you get to a point where, if you believe that your costs are vastly ahead of your realisable value you would have to book an impairment, would you not? So when would you think would be the right time to assess the business as far as an impairment goes?
Mr Quigley : That process is done on a regular basis. Our normal-running business looks at impairments on a regular basis together with our auditors.
Senator JOYCE: Have you booked an impairment?
Mr Quigley : No.
Senator JOYCE: You do not intend to book an impairment?
Mr Quigley : We cannot talk for the future. We certainly have not yet.
Senator JOYCE: So you have a business where your interest expense is vastly in excess of your revenue, you are holding $1.5 billion cash on hand because your rollout is not anywhere near your budget.
Mr Quigley : If I can correct you there, we do not have an interest expense.
Senator JOYCE: You have an interest revenue. Your interest revenue is vastly in excess of the revenue you have earned from telecommunications.
Mr Quigley : Yes, at this stage that is absolutely in line with the plan. That is what we expected.
Senator JOYCE: What do you envisage will be your revenue come 30 June 2012 as per your budget?
Senator Conroy: You mean 2013.
Senator JOYCE: Yes, this year. 30 June this year.
Mr Quigley : Around $15 million is what we had in our corporate plan.
Senator JOYCE: And are you tracking to path? You will be doing month-by-month budget to actuals—how are you going?
Mr Quigley : As I said, we are slightly ahead of what we expected to be at.
Senator JOYCE: What is the government charging you for the cost of funds that they are contributing to the business?
Mr Quigley : It is an equity injection.
Senator JOYCE: But the government pays for the cost of funds.
Senator Conroy: Like you are going to pay for the $29.5 billion you have agreed to borrow. Were you out of the room? You were, weren't you? The dog ate your homework! You were out the room when they told you that.
Senator JOYCE: This is what scares Australia, Senator Conroy; that you are somewhere near this deal.
CHAIR: Senator Joyce, do you have more questions?
Senator JOYCE: I have. Currently, the cost of funds to the Commonwealth is being interpreted as an equity injection into yours. I know that the equity injection last year was close to $3 billion; what is it now?
Mr Quigley : The total equity injected is $5.2 billion.
Senator JOYCE: So the government is booking the asset at around $5.2 billion on its books?
Mr Quigley : I cannot answer the question for the government.
Senator JOYCE: What is the government booking this asset on its books at, Minister Conroy?
Senator Conroy: Can I have some assistance?
Senator JOYCE: You need a lot of that, mate.
Senator Conroy: As you said, it is the Nationals' broadband plan; we stole your idea!
Mr Robinson : The department, on behalf of the government, books an asset value for the NBN equity. I would have to take on notice what the current numbers are.
Senator JOYCE: So contributed equity is around $5.2 billion. Are you expecting that the asset value that the government has booked is around $5.2 billion?
Mr Robinson : I said I would have to take the current numbers on notice.
Senator JOYCE: Mr McLaren, could you give me a rundown on when you have to book an impairment under government grants? Mr Payne, you are the auditor, can you tell me—
Senator Conroy: It takes one to know what one looks like, Senator Joyce.
Mr Quigley : So just to be clear, Senator, Mr Payne is our Chief Financial Officer, he is not—
Senator JOYCE: What is the NBN's position of when an impairment, if it had to be booked, should be booked?
Mr Payne : When there is clear evidence that an asset is impaired. That is what the accounting standards require you to do.
Senator JOYCE: Okay, and what would be the process that you would come to that?
Mr Payne : We go through a process at least once a year, usually more often than that, with the auditors—so with the ANAO and PricewaterhouseCoopers—and we look for any indications that assets are impaired. It is a fairly rigorous process. We are doing it, obviously, now as part of the lead-up to the audit for the end of the current financial year. We do that, as I say—
Senator JOYCE: So you are currently going through a process of discussing or discovering whether there is an impairment to this asset?
Mr Payne : Yes.
Senator JOYCE: Good. Thank you.
CHAIR: Just on that point: is that standard business procedure?
Mr Payne : That is our business standard.
CHAIR: So what NBN is doing is nothing out of the ordinary?
Mr Payne : It is best practise, what we are doing.
CHAIR: So if we read the paper tomorrow and there is a problem with NBN because it is impaired, that would be a beat-up, would it?
Mr Payne : That would be nonsense.
Senator Conroy: I just have some information for Senator Joyce. The budget confirms that the total government equity to be invested in NBN Co. has not changed and remains at $30.4 billion—Budget Paper No. 1, page 1-26). NBN Co. equity requirements are considered annually as part of the budget process, with this process determining the annual payments to be provided to the NBN Co. over the budget and forward estimates.
Senator JOYCE: Could you just read back the first part of that answer? The first part of your answer just then?
Senator Conroy: The budget confirms that the total government equity to be invested in NBN Co. has not changed and remains at $30.4 billion—as opposed to your proposal which is $29.5—
Senator JOYCE: So are you saying we have invested $30.4 billion now?
Senator Conroy: No. I said that 'the budget confirms that the total government equity to be invested'.
Senator JOYCE: 'To be invested'.
Senator Conroy: And your total government equity to be invested is $29.5 billion.
Senator JOYCE: Now, of that—
Senator Conroy: But I will keep going: NBN Co. equity requirements are considered annually—it is the process, so we are clear—as part of the budget process, with this process determining the annual payments to be provided—
Senator JOYCE: It is not actually the question I am asking. It is a babble that you are giving at the moment.
Senator Conroy: No, I am giving you facts on NBN Co. The government expects to invest $2.6 billion—
Senator JOYCE: When do you expect the process of discovering—
Senator Conroy interjecting—
Senator JOYCE: Can I finish my answer?
CHAIR: Order! Senator Joyce, let the minister finish his answer.
Senator JOYCE: But it is not a question I asked.
CHAIR: Well, just let the minister finish his answer.
Senator Conroy: The government expects to invest $2.6 billion in NBN Co. in the financial year 2012-13—
Senator JOYCE: It is a babble—
Senator BIRMINGHAM: $2.1 billion less than you planned to—
Senator Conroy: compared to the $4.7 billion forecast at the 2012-13 MYEFO published in October 2012. NBN Co.'s projected capital and operational expenditure will be lower than expected in the financial year 2012-13 and 2013-14 with only a minor impact by 2014—
Senator JOYCE: What is this? Some sort of filibuster to protect—
Senator Conroy: No. I was just giving you some facts.
Senator JOYCE: Are you scared of—
Senator Conroy: I am finished, Senator Joyce. We all defer to your—
Senator JOYCE: I have a question. In the discovery of the impairment of an asset, at what point in time do you expect to come to a conclusion on that before the finalisation of your end-of-year statements?
Mr Payne : As I say, that is a process that we review, usually, two or three time a year with the board and the audit committee. So we will do that—
Senator JOYCE: Has that board and audit committee met for that process at this point in time?
Mr Payne : They have not met to approve the 30 June 2013 accounts, no.
Senator JOYCE: When do you expect to have that meeting?
Mr Quigley : They did for the last Senate accounts. It is a regular process.
Mr Payne : It is a regular process; but we have not finished the year yet.
Senator Conroy: Probably after 30 June. I am not an accountant and I knew that.
Senator JOYCE: Can you give me your own version of what the process will be to discover or otherwise whether there has been an impairment to the asset of $5.2 billion you have contributed thus far? Will you be looking at budgets to actuals, will you be looking at rollout, will you be looking—
Mr Payne : Yes, we look at a whole variety of data. We look at—
Senator JOYCE: And you are happy at this point in time? I am going to put you on the record. Are you happy at this time that everything is tracking?
Mr Payne : Personally, yes.
Senator JOYCE: And you would put your reputation on it?
Mr Payne : Yes.
Senator JOYCE: What about you, Mr Quigley, are you going to do it?
Mr Quigley : Going to do what, Senator?
Senator JOYCE: Are you quite happy at this point in time that there is no requirement for any impairment of the asset?
Mr Quigley : We go through a process regularly. With the last one we went through to close our books, we looked at asset impairment and we came to the conclusion, together with our auditors, and approved by the board of the company, that there was no need to impair any assets.
CHAIR: Mr Quigley, the last time I saw a look like that it was from Dr Ken Henry, so don't worry!
Senator Conroy: To be fair, Barnaby is actually asking questions about Senate estimates; he deserves congratulations!
Senator JOYCE: Your trade and other payables at this point in time is what figure—in your liabilities?
Mr Payne : I would have to take that on notice. I do not know it off the top off my head.
Senator JOYCE: How many people have you connected up in Armidale now?
Mr Quigley : I can probably find that. Just hang on one moment.
Senator Conroy: I think it is well past 1,700 and heading towards 2,000. But I have not seen the count recently.
Mr Quigley : It is 2½ thousand.
Senator Conroy: I was very modest!
Senator JOYCE: 2½ thousand?
Mr Quigley : Yes.
Senator JOYCE: Would Armidale have the highest proportional connection rate of any town?
Mr Quigley : No.
Senator Conroy: No. As you have heard me say often in the Senate, Willunga and Kiama are competing for that, but Armidale is well ahead of our forecast.
Senator JOYCE: How many premises is that 2,500 as a percentage?
Senator Conroy: 23 per cent.
Senator JOYCE: Are there still people being connected in Armidale? I presume there would be.
Mr Quigley : Yes, absolutely. In fact, I think we have quite a number pending there. Orders are coming in at a very steady rate.
Mr Steffens : Yes. We have a few hundred to connect.
Senator JOYCE: Right. What about Uralla?
Mr Quigley : Where?
Senator JOYCE: Uralla, the next town down.
Senator Conroy: I do not think the rollout has started there yet.
Senator JOYCE: What about Bendemeer?
Senator Conroy: No, it has not started there yet either.
Senator JOYCE: What about Guyra?
Senator Conroy: Are we on a tour of your intended place to live?
Senator JOYCE: Tenterfield? Glen Innes? Anywhere else?
Senator Conroy: The sites are well listed and you can look all of these up.
Senator JOYCE: What about Tamworth? There is a big town—how many in Tamworth?
Senator Conroy: Would you like to go onto the NBN Co. website?
Senator JOYCE: No, I just want to know how many you have got in Tamworth, because that is rather—
Senator Conroy: We have the number of fixed wireless customers around Tamworth. We have not started fibre in Tamworth. But we have a number of fixed wireless customers.
Senator JOYCE: How many have you got in Tamworth?
Senator Conroy: Fixed wireless customers, we have some. I will take that on notice.
Senator JOYCE: Have you got any?
Senator Conroy: The rollout has not started in Tamworth.
Senator JOYCE: So none in Tamworth?
Senator Conroy: There will be more customers on the NBN than there will be on your $29.5 billion FTTN.
Senator JOYCE: So you have none in Tamworth?
Senator Conroy: We have not started to build there, Senator Joyce.
Senator JOYCE: What are you currently holding in derivatives and financial assets?
Mr Payne : They relate to forward foreign exchange contracts that we have—hedges against some of our large US dollar denominated contracts, such as the satellite purchases.
Senator JOYCE: What price did you hedge at?
Mr Payne : There are a variety of prices.
Senator JOYCE: Can you give me the scope? What is the average price you have hedged at?
Mr Payne : We would have to take that on notice.
Senator JOYCE: You don't have any idea about the average price you have hedged at?
Mr Payne : We have entered into these hedges over a period of a couple of years, so it is quite extended.
Senator JOYCE: So you coverage is for what amount of money?
Mr Payne : I think we have about $800 million open at the moment.
Senator JOYCE: $800 million open.
Senator Conroy: The cost of a couple of satellites.
Senator JOYCE: And at what point in time did you start hedging that?
Mr Payne : I would have to take that on notice.
Mr Quigley : We are in good shape in terms of our hedges, are we not, overall?
Mr Payne : Yes. Had we not hedged—
Mr Quigley : If we had not hedged, Senator, we would be paying out a lot more money for the same assets. So the hedges were in fact well timed and well placed. By the way, to be absolutely clear, we do not speculate on exchange rates; if we have a need to hedge, we hedge.
Senator JOYCE: So you are in the money at the moment?
Mr Quigley : If I can just repeat: we do not speculate on that. We just hedge when we believe we should hedge, and we have a process that has been agreed with the board. We are just not into trying to guess what exchange rates are doing.
Senator JOYCE: Are you still in the process of hedging at the moment?
Mr Payne : When we have major contracts, yes.
Mr Quigley : We would hedge.
Senator JOYCE: And have you rolled out of any of your previous positions and made money on the deal?
Mr Payne : What do you mean by 'made money'?
Senator JOYCE: Well, obviously the dollar is depreciating at this point in time and you would have had positions of the dollar at a higher price. You should be making money at that.
Mr Quigley : We do not try to make money on hedges.
Senator JOYCE: I do not presume that you try to make money. I am just asking: have you?
Mr Quigley : They have been of net benefit to the company in the sense that if we had not hedged, we would have paid more than if we had hedged.
Senator JOYCE: What are you currently holding? What is your current position?
Mr Payne : It is about $800 million.
Senator JOYCE: A bit more, or a bit less?
Mr Payne : I do not have the figure, but it is around that—
Senator JOYCE: Not sure, or do not know?
Mr Payne : It is around $800 million.
Senator JOYCE: How much is in your receivables currently? You had about a million dollars at the end of last year, which seems rather low. So what are your current receivables? You must know that.
Mr Payne : I do not have the number on me.
Senator JOYCE: You do not know that either?
Mr Payne : Not off the top of my head, no.
Senator Conroy: We can take it on notice, Senator Joyce.
Senator JOYCE: You are at estimates. You are the senior financial officer, aren't you?
Mr Payne : Yes.
Senator JOYCE: Property, plant and equipment? That is static; you should know that. You must have done a reconciliation—
Senator Conroy: Senator Joyce, you would have to have the entire financial accounts to be able to answer all of these questions.
Senator JOYCE: I am talking to the senior financial officer and minister and the CEO. I thought that one of them might know.
Mr Payne : We obviously have all of that information, but I do not have all of that information at my fingertips.
Senator JOYCE: You do not have that information either.
Senator Conroy: We are happy to take it on notice for you, Senator Joyce.
Senator JOYCE: What information have brought with yourself tonight?
CHAIR: That question is so wide—
Senator Conroy: It is being rude and obnoxious. Now, we are happy to take it on notice, Senator Joyce. Is there another question you would like to ask? Would you like to ask the cost of borrowings for Malcolm Turnbull's FTTN plan?
Senator JOYCE: No, I would like to ask—
Senator Conroy: It is $29.5 billion that you are borrowing—
Senator JOYCE: I would like to ask what your current wage and salary bill has been, what your current consultancy bill is and what contracts are currently in place—or contract expenses.
Mr Payne : I can do them at the end of April.
Senator JOYCE: That will do.
Mr Payne : Sorry, what were the questions?
Senator JOYCE: Wages and salaries?
Mr Payne : Staff related costs are about $295 million.
Senator JOYCE: That is year to date?
Mr Payne : Year to date.
Senator JOYCE: So that is $295 million in wages and salary. Contractors?
Mr Payne : That is included in that.
Senator JOYCE: And in regard to your contractors, obviously your superannuation is paid up to date?
Mr Payne : That is all included, yes.
Senator JOYCE: Do you have any other contingent employee liabilities?
Mr Payne : For things like long service leave—
Senator JOYCE: Long service leave.
Mr Payne : We do, yes. I do not know if I have that exact balance with me. In fact, I am pretty sure I do not have that level of detail. We would have to take that on notice.
Senator JOYCE: For your salary and wage component, what has your average sick leave been in days? Would it be 10 per employee?
Mr Payne : I do not have that detail.
Senator JOYCE: It runs at about 10 days. I am just trying to work out what it is in your company. It is always a sign of, basically, the morale and the attitude inside the company.
CHAIR: I think that is a bit simplistic and naÃ¯ve to be honest, but anyway.
Mr Quigley : We can get you that information, Senator.
Senator JOYCE: Have you had any discussions with contractors—because I have—who have basically said that the cost of driving fibre to the home is just going through the roof?
Mr Quigley : We have had discussions with our contractors regularly—weekly.
Senator JOYCE: Is it running to budget?
Senator Conroy: Senator Joyce, I do not think you are a member of the committee, but if you had attended a hearing of the joint parliamentary committee recently or read the Hansard, you would have seen that Mr Quigley tabled a range of costs for fibre to the home. They were between $2,100 and $2,500, I think, which were within the forecast for the budget.
Senator JOYCE: So you are saying that your cost of rollout of fibre-to-the-home is running to budget?
Senator Conroy: I think what Mr Quigley said is that they had $3 billion in contingency. They have not touched any of it in the $37.4 billion.
Senator JOYCE: So they are running to budget?
Mr Quigley : Yes, we have no reason to change the total capex numbers that we had projected in our last corporate plan. We have, as we revealed at the last joint parliamentary committee, 10 per cent of the capex as a contingency and we have preserved that.
Senator JOYCE: What is your expected completion date? Has it changed at all?
Mr Quigley : No, it has not. We are still at mid 2020-21.
Senator JOYCE: What will the percentage of completion be by the end of the financial year?
Mr Quigley : Percentage of completion? If you were combining brownfields and greenfields rollout, the number we were forecasting was between 190,000 and 220,000 premises. So we have got still a very long way to go over the next eight years.
Senator JOYCE: You are working to a number between 190,000 and 220,000 by the 30 June? Is that correct?
Mr Quigley : Correct.
Senator Conroy: About then there will be almost a million under construction or completed.
Senator JOYCE: What is the ultimate number of premises that you believe to be—
Mr Quigley : Fibre premises—roughly 11 million by mid 2020-21, unless there is a ramp up—
Senator Conroy: You are sounding financially smart. I am sure you know what a ramp-up is.
Senator JOYCE: That is it. Good luck.
Senator Conroy: We have stolen your plan; I know you are still sulking. It was your press release that said it is the Nationals' broadband network, stolen from the Page Research Centre.
CHAIR: Senator Joyce, have you got any further questions?
Senator JOYCE: Not of that clown.
CHAIR: Senator Birmingham.
Senator BIRMINGHAM: Thanks, Chair. Just to follow on from one the issues that was partly touched on then, Mr Quigley, can you explain to the committee what the change in spending in the investment profile of NBN Co. will be as a result of the reduced equity—
Senator Conroy: You are not really still going to run on this rubbish, are you? I mean, fair dinkum.
Mr Quigley : I am not sure I understood the question, Senator.
Senator BIRMINGHAM: Senator Conroy, at least in 2012-13, highlighted in one of his answers to Senator Joyce the reduced equity contributions from government to NBN Co. As against the MYEFO at the end of last year to the budget papers recently handed down in 2012-13, there is a $2.1 billion reduction in equity contribution, and in 2013-14 there is a $1 billion reduction, and in 2014-15 a $0.4 billion reduction. What changes to NBN Co.'s expected expenditure and costs have warranted and necessitated or justified that reduced equity contribution from the government?
Mr Quigley : Largely, the brownfields rollout. We are also seeing, as we talked about before, the greenfields demand is down from what we had originally thought. We just respond to the market. We can only build new greenfield premises that are required or asked of us by the market and, as you know, the housing industry has been down somewhat in the last few years, so that has had an impact on our need. We expect that, in fact, to recover to the long-term trend rate for new housing developments.
Senator BIRMINGHAM: Over the next one, two or three years, how much less do you expect to spend on greenfields developments?
Senator Conroy: It depends on how many houses are built, I would assume, Senator Birmingham.
Senator BIRMINGHAM: I assume Mr Quigley has a budget, Senator Conroy.
Mr Quigley : We are developing now the corporate plan which we submit to the government around this time, within the next month or so, and that will be contained in that document.
Senator BIRMINGHAM: Did NBN Co. advise the government of what its required equity injection is worth—
Mr Quigley : Yes, we do. We make forecasts of equity injections.
Senator BIRMINGHAM: What parameters were you specifically changing to justify those reduced equity injections?
Mr Quigley : Just the general ones we talked about. We have obviously reprofiled the brownfields rollout. There are probably slight ups and downs right across the board—transit, satellite, fixed wireless, brownfields, greenfields. That is all contained within the quite substantial analysis that we do.
Senator BIRMINGHAM: There are obviously some big elements in there.
Mr Quigley : The big elements are the reprofiling of the brownfields rollout and the greenfields.
Senator BIRMINGHAM: To what extent is the brownfields rollout reprofiled over the next three years now compared to what was forecast in the MYEFO that was handed down late last year?
Mr Quigley : We will have to take that on notice.
Senator BIRMINGHAM: Can you give me some ballpark figures? We have the chief financial officer here and you are here, Mr Quigley. Surely we can get some indication as to what it is, out of the $3.5 billion less over the next three years less that the government is now giving to NBN Co., that you will not doing in the next three years that you expect to be doing beyond the next three years.
Senator Conroy: The question does not make sense.
Mr Quigley : The process we are going through is one that you would expect us to go through. We are developing the next version of our corporate plan, which we take to the board. The board needs to approve it. We then submit it to our shareholder. At this point in time, until it is finalised, I would not like to put a number on the table, because we have not gone through that board approval process and then submitted it to the shareholder.
Senator BIRMINGHAM: When you develop that corporate plan and submit it to the shareholder you will be working on the basis of the equity injections the government has told you it has budgeted for.
Mr Quigley : Yes, largely.
Mr Payne : We do not anticipate any significant changes to that.
Senator BIRMINGHAM: You do not anticipate any significant changes to those equity injections?
Mr Quigley : No.
Senator BIRMINGHAM: As a result of these lower equity injections over the next three years, will you potentially in that corporate plan be adjusting your forecasts for greenfields sites, brownfields sites and wireless sites over that three-year period?
Mr Quigley : No. The process works. With greenfields, for example, we look at what we think the market is going to do and at our demand. We have a policy in place.
Senator BIRMINGHAM: I understand that, Mr Quigley. You have said you think that the market is doing less at the moment, that it is coming in below budget and that you are going to need less money over the next three years. Of the $3.5 billion less you will be getting over the next three years, can you give any indication as to how much is attributable to the slower take-up of greenfield sites—the slower housing market?
Mr Quigley : That is contained within the document that we have now prepared and will put through the board and submit to the shareholder.
Senator BIRMINGHAM: Equally, there is a reprofiling of brownfields sites.
Mr Quigley : Yes.
Senator BIRMINGHAM: Is that reprofiling in addition to the three-month delay and the change to forecast that you announced a few weeks back?
Mr Quigley : No, that reprofiling takes into account the three-month delay that we were seeing at the beginning of the program.
Senator BIRMINGHAM: It takes into account that three-month delay but also reprofiles the build over the next three years compared with what you had previously placed.
Mr Quigley : Yes, as you said. The end date remains at mid-2021. What we had in the previous profile was a ramp-up, which in fact went up and then came down slightly and stayed flat at a slightly lower level over a period of time before it then tailed off towards 2021. We are now getting up to that peak and holding that. We have not changed the peak rate at which we pass premises or activate premises. We are holding that peak rate for longer, which makes up for the delay that has occurred at the front end. That reprofiling is being done. We are reprofiling brownfields that way. We are reprofiling greenfields on the basis of the data we get in, largely from places like the ABS, and we do the other adjustments—which may be in transit satellite or fixed wireless—and look at our cost basis as well, our OPEX. We pull all that together in a corporate plan. We budget year by year. That is what we will submit to the government.
Senator BIRMINGHAM: I understand that is what you do, Mr Quigley. Equally, the government has budgeted to give you $3.5 billion less over the next three years. What I am really asking for tonight is to get some degree of specifics around what impact that has on NBN Co.'s deliverables at the end of that three-year cycle.
Mr Quigley : It is more the other way around. As we develop this plan, we have discussions with the government about what we believe our equity needs are going to be over the period and we iterate.
Senator BIRMINGHAM: But you just said that you were developing the plan to the equity injection the government has budgeted.
Senator Conroy: You have to expand it.
Mr Quigley : No, the government did not give us an equity injection and say, 'Work with this, and do what you can.' We developed a plan—
Senator Conroy: We supply and request. I regularly sign off cheques.
Senator BIRMINGHAM: So, in that case, you actually know the information already.
Mr Quigley : No, I am saying that we are developing it. We put it through our board and submit it to the shareholder.
Senator BIRMINGHAM: Did the government provide this level of equity funding based on what NBN Co.'s needs to meet its objectives are?
Mr Quigley : Yes, our preliminary projections—our draft projections. I think you asked before whether we expect our draft projections to change. No, we do not.
Senator BIRMINGHAM: Do you expect at the end of 30 June 2015 to have passed fewer brownfields premises now than you would have expected to at the time of the MYEFO at the end of last year?
Mr Quigley : Yes, probably. As we do that reprofile, I think the answer is yes.
Senator BIRMINGHAM: Will that just be the three-month delay that has been announced or will it in fact—
Mr Quigley : Yes, largely.
Senator BIRMINGHAM: be an even bigger figure?
Mr Quigley : No, we do not expect it to be bigger. As we said, we would take account of that delay and have a look, realistically, at what we think a reasonable ramp-up is. We have learnt along the way, so we do not expect to have any dramatic shifts in that. What we are not trying to do is recover that three-month delay unrealistically fast.
Senator BIRMINGHAM: And with $3½ billion less equity injection, I would not have thought that you would be able to.
Senator Conroy: It is more about sustainability of the build and the expectation of what the sector could manage.
Senator BIRMINGHAM: I find it hard to believe that a slower housing market and a three-month delay constitutes $3½ billion less equity funding for the next three years.
Senator Conroy: We cannot help it if you do not understand the questions you are being fed. We cannot help you.
Senator BIRMINGHAM: Come on, Senator Conroy.
Senator Conroy: We cannot help you if you do not understand the questions you are being fed.
Senator BIRMINGHAM: So a slowdown in the housing market and three months of delay by NBN Co. is worth $3½ billion?
Mr Quigley : There a lot of other factors that we have looked at.
Senator Conroy: We are happy to take that on notice and to try to give you a more detailed explanation to assist your understanding. I say that to you quite genuinely.
Senator BIRMINGHAM: When do you think we might get that detailed explanation if you take the question on notice? Would you be willing to give the committee some level of undertaking about when that might actually be returned, noting that we got 80 answers tonight to questions taken on notice last February?
Senator Conroy: Really? I used to get them after estimates was finished. That is amazing, I cannot believe you have them before and I am shocked! I used to get them tabled, literally, at the end of an estimates meeting. Can you believe that?
Senator BIRMINGHAM: You are going to take it on notice and bury it until after the election, aren’t you?
Senator Conroy: Can you believe that? You clearly do not understand the questions you are being fed.
Senator BIRMINGHAM: You are going to take it on notice and bury it.
Senator Conroy: I am offering to take it on notice.
Senator BIRMINGHAM: If I have the question so wrong, then you can give us the answers quickly, can't you?
Senator Conroy: Hopefully, on this one we can relatively quickly. Would you like us to take it on notice to try to assist you?
CHAIR: Senator Birmingham and Senator Conroy, I have been very patient. Senator Birmingham, unless you have questions, the question will be taken on notice.
Senator BIRMINGHAM: I will move on to another issue, Chair—but I would appreciate perhaps some support in getting Senator Conroy to commit to give answers in a timely way.
CHAIR: The minister is entitled to respond in whatever way he likes.
Senator BIRMINGHAM: He is entitled to take it on notice. I would just hope that we might actually get the answers in a timely manner.
CHAIR: I am happy to put some questions if you have had enough.
Senator BIRMINGHAM: I am happy to move on, Chair. NBN Co. recently announced it was paying $9 million to TransACT to buy its fibre-to-the-premise network, connecting, as I understand it, 8,500 houses. When do you anticipate or expect this to be approved, or not, by the ACCC?
Mr Quigley : We will not try to predict timetables of the ACCC.
Senator Conroy: That is fraught with danger.
Senator BIRMINGHAM: What processes are you up to with the ACCC?
Mr Quigley : I believe we have had some preliminary discussions with the ACCC. I am, frankly, not aware. I may have some information that tells me where we are with that process. No, in fact, I do not have details on the ACCC approval process. It is a process we have to go through. They have to approve the deal.
Senator BIRMINGHAM: What, if any, upgrades are need to the TransACT network before it can be connected to the NBN network?
Mr Quigley : We have to bring it in line, largely, with our architecture. The fundamental civils are there. The fibres are all usable. Almost certainly some changes will be needed to equipment.
Senator BIRMINGHAM: Do you have a budget or rough cost for that?
Mr Quigley : Yes, we will have worked that out. I do not have that with me. But we would have worked through all of that and made sure that it was, in fact, net positive for us. Otherwise, we would not have done the deal.
Senator BIRMINGHAM: Does the chief technology officer or chief financial officer have an indicative cost?
Mr Payne : I do not have the numbers here.
Mr Quigley : What we can tell you is that, when you look at the cost we paid for the civil infrastructure and you look at the cost of the upgrade of the equipment which is required, that total cost will be less than it would have been if we had built it from scratch ourselves.
Senator BIRMINGHAM: That is pleasing to hear. I suggest it shows the private sector can do these things in an efficient way. When will the NBN Co. be counting this network amongst its premises passed?
Mr Quigley : Sometime later. Not in the next month or two.
Senator BIRMINGHAM: Will it be after you have received the ACCC approval?
Mr Quigley : Certainly, yes.
Senator BIRMINGHAM: Certainly not until then?
Mr Quigley : Absolutely.
Senator BIRMINGHAM: Not until the necessary network upgrades are done?
Mr Quigley : Absolutely, yes.
Senator Conroy: What are you worried about?
Senator BIRMINGHAM: It is just important sometimes to understand the statistics that are used. It is not beyond you to add things—
Senator Conroy: You are worried we are going to sneak them in and claim them?
Senator BIRMINGHAM: I am just making sure we understand entirely the situation.
Senator Conroy: We are not planning on it, Senator Birmingham.
Senator BIRMINGHAM: How long would you expect the upgrades to take once you have received the ACCC approval?
Mr Quigley : I do not think it is a particularly difficult job.
Mr Steffens : I think it will take a number of months.
Senator BIRMINGHAM: Given the cost-effectiveness of purchasing the TransACT network, why did the NBN abandon the build-operate-transfer model for greenfield sites?
Mr Quigley : You have to remember that this is a transaction where we are purchasing some civil infrastructure from an operator who decided—and I think Mr Malone, who runs iiNet which now owns TransACT, is on the public record as saying this—they did not want to be an infrastructure owner. So his purchase of those assets and the price at which he was willing to sell them is not an easy equation. You should not assume that he is selling them, necessarily, at the cost of building them.
Senator BIRMINGHAM: Are you suggesting he is selling them at a discount?
Senator Conroy: No.
Mr Quigley : I am not suggesting anything. I am just saying you cannot draw a simple conclusion that, because we are buying them at less than it would cost us to build them today, they could be built today at a cost lower than our cost by the same people who originally built them. I do not believe that would be the case.
Senator BIRMINGHAM: There are also media reports that NBN Co. and Telstra have come to commercial terms on five FSAMs on which Telstra did early design and remediation work.
Senator Conroy: I did read that story as well. It was news to me. Anyone want to confess? Kieran, you have not said a word tonight. You do not get paid. Come on—fess up. Have you been dealing with Telstra without telling us.
Mr Cooney : No.
Senator Conroy: He is on record.
Senator BIRMINGHAM: Is there any truth to those reports?
Senator Conroy: Was it in the Financial Review?
Senator BIRMINGHAM: You are as curious as I am, Minister.
Mr Quigley : Any transactions we do, we announce at the appropriate time. I can tell you that there are no transactions we are announcing at the moment in relation to that.
Senator BIRMINGHAM: Are you in any negotiations for—
Senator Conroy: Five FSAMs?
Senator BIRMINGHAM: Or similar propositions?
Senator Conroy: My recollection of the story in the Financial Review is that it was an internal Telstra document which indicated that there was no business happening.
Senator BIRMINGHAM: So there are no such discussions underway, Mr Quigley?
Mr Quigley : No. What I can tell you is that we have a range of discussions with various people in the industry at various times to explore a number of options.
Senator Conroy: You will be shocked to know how many people try to flog us things.
Mr Quigley : Some of them lead to something and some of them do not. It would be I think improper of me to speculate on things that may not be concluded or may never be concluded.
Senator BIRMINGHAM: That is probably fair enough for that. I want to ask about the rate of contracting at present in terms of the totality of the project. Let us start with what actually has been achieved. Of the raw numbers you have given us tonight, in terms of the number of fibre premises that have been passed what percentage is that of the total target number of premises to be passed?
Mr Quigley : Are you talking about to mid-2021?
Senator BIRMINGHAM: Correct.
Mr Quigley : You have to divide the number we have given you by roughly 11 million.
Senator BIRMINGHAM: We can do that. I am pleased to say. What number of premises passed have you contracted to have done?
Mr Quigley : That is I think on the public record. We have announced various deals with a number of suppliers and those numbers I think were in the press releases we went out with. I do not have the numbers off the top of my head.
Senator Conroy: It is all on the website.
Mr Quigley : It is on the website.
Senator Conroy: We can take it on notice or you can actually look up the website.
Senator BIRMINGHAM: I can do that, Minister—
Senator Conroy: You could.
Senator BIRMINGHAM: but there are a bunch of senior executives from NBN Co. sitting at the table here tonight and—
Senator Conroy: They did not know that they would be asked about questions from two years ago.
Senator BIRMINGHAM: I would have thought this was a pretty straightforward question. They are looking through their papers.
Mr Quigley : We have the information. We will certainly provide that information. They are all in the media releases. We simply have to add the numbers up.
Senator Conroy: We have to collate the media releases for you, but you could get someone to look at the website or do it yourself.
Senator BIRMINGHAM: In relation to wireless premises passed, we obviously have the total there for the short term. Can you remind me what the total number of wireless premises to be passed by 2021 or able to be covered is?
Mr Quigley : That is the number we said before.
Senator Conroy: As I said before, is between three and four per cent depending on line of sight and those sorts of things. So the seven per cent is usually characterised as fixed wireless four and satellite three, but it is variable depending on line of sight, trees and whether the number of premises actually exist.
Senator BIRMINGHAM: Sorry, you are saying that three and four per cent of the 11 million?
Senator Conroy: No, of the seven per cent.
Mr Quigley : Eleven million was the total fibre numbers.
Senator BIRMINGHAM: Yes, that is what I thought.
Mr Quigley : So there is roughly 12 million in total.
Senator BIRMINGHAM: So there are about one million premises to be covered by satellite—
Mr Quigley : And fixed wireless. It is slightly less.
Senator BIRMINGHAM: Thank you. One million, which we can obviously again calculate again from the figures you have given us tonight. Similarly, in terms of contracted fixed wireless coverage, what percentage of your target or what numbers have you got contracted already—
Senator Conroy: No, it is a one-off build for those—a contract of $1 billion-plus. If you want to know how much we have already spent, I think I added it up not that long ago—it is over $5 billion in contracts.
Senator BIRMINGHAM: So the contract for fixed wireless is to cover all the fixed wireless services?
Mr Quigley : No, I do not think so. I would have to check. I am not sure it is all of them. It is pretty close.
Senator Conroy: I thought it was one billion—1.1 or 1.2 for the build.
Mr Quigley : Close to.
Senator BIRMINGHAM: So the contract is close to the target.
Senator Conroy: I do not know the exact number.
Senator BIRMINGHAM: In the media releases that you provided, can the number of contracted builds to be undertaken be broken down easily by the state on the data you have published?
Mr Quigley : Largely. The contracts we have placed generally at the state level we have nominated which state—
Mr Cooney : Absolutely.
Senator BIRMINGHAM: There seems to be a little bit of doubt on your side of the table, can you take on notice to provide please, in terms of contracts let to date for fibre rollout, what proportion of each state would be covered by the contracts already let?
Mr Quigley : Yes, we should be able to do that.
Senator BIRMINGHAM: Thank you very much, Mr Quigley.
CHAIR: Mr Quigley, I note that on 19 April NBN announced it would deliver 1,000 megabytes per second services by Christmas. Are any equipment or network changes required to deliver this upgrade?
Mr Quigley : No. But if I could just correct it, it is a 1,000 megabits per second. We cannot do a 1,000 megabytes. That is eight times the quantity.
Senator Conroy: It moves around. It is a trick bugger, that one, Senator Cameron. I have already been bitten and bit by that one tonight.
Mr Quigley : The network we are building today, and the equipment we are putting in and obviously the fibre, are all capable of a gigabit per second or 1,000 megabits per second.
CHAIR: Are any further upgrades possible for the fibre?
Mr Quigley : You do not need to upgrade the fibre. You can upgrade the equipment on either end, and you can get a huge amount more capacity out of the fibre. It is virtually unlimited.
CHAIR: The fibre?
Mr Quigley : The fibre is virtually unlimited.
CHAIR: Four hundred megabits per second uploads is impressive. Is this upgradable as well?
Mr Quigley : Yes.
CHAIR: So it is just the equipment?
Mr Quigley : It is just the equipment on either end. The fibre can carry speed capacities in both directions—the same capacity in both directions.
CHAIR: There has been a recent alternative policy announcement with no mention at all of uploads. Are uploads—
Senator Conroy: How many pages was that document, off the top of your head?
CHAIR: Not many.
Senator Conroy: Actually, a lot of pages and not one word on 'upload'. You're right!
CHAIR: Are upload speeds of 400 megabits-plus possible on copper based networks, like fibre to the node?
Mr Quigley : My answer would be no. I will turn to my chief technology officer. I think he will say no as well.
Mr McLaren : No. It is not possible.
CHAIR: What was the total amount that the government's investing in the NBN?
Mr Quigley : The equity injection is $30.4 billion.
CHAIR: Has anyone ever come to grips with this $90-odd billion figure that has been promoted in the press?
Mr Quigley : I am not sure of the basis of that. Our number is $30.4 billion in equity injection and $37.4 billion? Correct? Our latest capex number? Yes.
CHAIR: Now there has been some discussion already today about the cost of a standard installation of NBN to the home. What is the cost of a standard installation to a householder?
Mr Quigley : Nothing. It is part of—
Senator Conroy: Zero. It is free.
Mr Quigley : Yes.
CHAIR: The argument we heard earlier was that there was a cost. So there is no cost to actually give people the access to the NBN.
Mr Quigley : That is correct. Yes, with standard installation—no cost. There was another policy that if somebody is outside the fibre footprint and they would like a fibre service, they can request it off us and we will give them a quote. It is called a network extension.
Senator Conroy: And we have got a couple of people doing it.
Mr Quigley : We have got someone who has done that, yes.
CHAIR: And there have been other figures bandied about for the cost of a fibre-to-the-node connection. Does anyone have any information about that? No?
Mr Quigley : That is not part of our objective.
CHAIR: Senator Conroy?
Senator Conroy: Sorry, what was the question again. Senator Cameron?
CHAIR: The question is: I have said there have been figures bandied around for the connection price to an individual household for connection to fibre to the node.
Senator Conroy: Yes. Look, I know that Senator Birmingham is a big fan of BT. If you had a BT and lots of technology that Senator Birmingham's policy advocates, the BT website indicates that it can cost up to $5,000 for an individual connection if you want fibre to the home—up to $5,000. But the other really interesting piece of information I found out recently is that, in Germany, to deliver speeds of guaranteed 25 meg, they have had to build 300,000 nodes. Deutsche Telekom: 300,000 nodes for a population a bit denser than ours. I find that an extraordinary statistic, but I am sure Mr Turnbull is right and that he can build his network guaranteeing 25 or hoping to deliver 25 with 60,000 to 70,000 nodes. I know you are interested in these things, because I went to New Zealand, but you should really have a look at the Deutsche Telekom example and how they built their fibre-to-the-node network, but they do say it is only a stepping stone to their ultimate game, which is a fibre-to-the-home network.
I have some other information that I would like to put on the record before we are finished. This is in answer to Senator Joyce. NBN Co. is a prescribed government business enterprise under the Commonwealth Authorities and Companies Regulations. Accordingly, NBN Co. operates a company at arm's length from the government, dealing with other companies, and NBN's copper plan does not include the costs associated with its equity held and its funding costs in its financial estimates. Government borrowing costs are factored into the budget as part of the public debt interest, PTI, expense. PTI is the cost of servicing the stock of Australian government debt incurred to meet financing other borrowing requirements.
There are a couple more points, but I am conscious of the time. Before I finish, I want to say thanks to a whole range of people. It is a growing list, so apologies to anybody I miss. I would like to send a thank you to UTC, anniepink, Tailgater, ungulate; and particularly Frood, The Lost and Axman6, who have come out on a very cold Canberra night to listen to what—
CHAIR: Are you still speaking English?
Senator Conroy: Yes. These are names online: aarq-vark, Megalfar, jwbam, Texmex, Cadibas, Mud Guts, FatPat, Murdoch, The Monsta, Seven Tech, Mr Creosote and Glass Snowy. Also a hello to miah. I thank all of them for playing Whack-A-Mole with all the trolls online.
CHAIR: Senator Birmingham, you have a clarification.
Senator BIRMINGHAM: I have one quick question for clarification, Mr Quigley. In relation to the total number of premises to be passed by 2021, you gave me figures of 11 million fibre premises and about one million wireless satellite premises. Can I just check: the 2012 corporate plan indicates 12.5 million fibre premises and a touch under one million satellite wireless premises—is that correct?
Mr Quigley : Taking account of the premises that are going to be built between now and then.
Senator BIRMINGHAM: Thank you.
CHAIR: That concludes the committee's examination of Broadband, Communications and the Digital Economy. I thank the minister and officers for their attendance, as well as Hansard, Broadcasting and the secretariat staff. Senators are reminded that written questions on notice should be provided to the secretariat by close of business Wednesday, 12 June 2013. Well done, everyone.
Committee adjourned at 10:57