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National Broadband Network Financial Transparency Bill 2010 (No. 2)
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- Question No.
Humphries, Sen Gary
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Thursday, 25 August 2011
Senator HUMPHRIES (Australian Capital Territory) (09:51): I see that the government is determined to push ahead with the National Broadband Network. The government is determined to ensure that the decision announced a couple of years ago to develop a very expensive, very elaborate and very anticompetitive broadband regime for this country should proceed, notwithstanding that this model was put together in essence in a very short space of time. We need to remember that the government went to the 2007 election promising to deliver a broadband network that would cost Australians, in terms of public investment at least, something like $5 billion. It became evident after a time that this scheme was not going to work and that it was incapable of attracting the investment from suppliers and providers necessary to make it work. Accordingly, that plan was dumped in favour of a much, much more ambitious plan: a $50 billion plan. That plan was put together in a matter of days between the tender process for the original version collapsing and the new one being announced.
In circumstances such as these the relevance of the government's own promise to the Australian people before the 2007 election that it would not proceed with major government developments or infrastructure projects without a cost-benefit analysis became far more relevant—and this is the granddaddy of all government developments or infrastructure projects. It is the most ambitious thing that Australia, collectively, has engaged in and it lacks that very essential prerequisite of a cost-benefit analysis, which Labor itself made such a virtue of advocating for before the 2007 election. That is why this legislation is before the Senate today.
The opposition does not, in any sense, question the need for Australians to have a fast, reliable broadband network that can be accessed by Australians at an affordable price; we do not demur from that goal. But we question whether the government has done the basic homework necessary to assure the Senate, the parliament and the Australian people—the taxpayers—that there has been the right choice in this network, the National Broadband Network, over other alternatives. That is why this legislation calls for the cost-benefit analysis which the government failed to do.
We are implementing your policies with this legislation. We are holding you to the commitment you made to the Australian people back in 2007 because we believe in fiscal rectitude and the prudent use of the taxpayers' dollars. We do not think that there is any way that the very much afterthought type exercises that this government has engaged in around its implementation of the NBN can be justified as a proper, full and complete cost-benefit analysis of this major project. That cannot be allowed to stand if the commitment of the Australian people is to stand in the order of $50 billion.
Of course, during the last few years of the previous Howard government moves were underway to deliver high-speed broadband to Australians through the OPEL policy. I have heard criticism that the Howard government came to this position late, but I remind honourable senators that technology changed so quickly in the period before that decision was made, and continues to change so quickly, that it is right to hold back until the best available technology emerges in the marketplace. That is exactly what the Howard government did. It planned to deliver high-speed broadband with OPEL, not in competition with but in cooperation with the private sector. I believe that that plan would today have delivered reliable high-speed broadband to thousands of Australians—in fact millions of Australians—who are still waiting for the NBN.
Senator Conroy, the minister, likes to cast the debate in terms of the government being on the side of modernity and the coalition being atavistic, that they are grasping the future and we are clinging to the past. But with those broad statements and emotional lines he ignores the truth that this investment is of such a magnitude and involved in an area of technology subject to such rapid change that it is unwise in the extreme to proceed without every possible check and review and every possible testing of the market that the government might have at its disposal and that, in short, by doing so the Australian taxpayer is fully protected.
There are a number of nagging doubts that any observer of the communications market would have to have in looking at the way in which the NBN is constructed. For one thing, it is the most expensive possible way to achieve the objective of fast, reliable broadband. It uses the most expensive possible network design: fibre to the home. It makes no use of existing fixed-line last-mile communications infrastructure. In fact, it overbuilds all of that. In that sense, it is colossally wasteful. It is as if you decided that your kitchen needed to be renovated, your bathroom was in need of a bit of an uplift and that the back porch needed to have the floorboards replaced so you decided to knock the whole house down and rebuild it. That is the extent and the breadth of the decision that the government has made.
Again, it might be the right decision—but we just do not know, because a full cost-benefit analysis of this option versus the alternatives has not been done. We know that the NBN is the most anti-competitive way to achieve the objective of building universal access to fast broadband. Senator Stephens said that competition would exist in the marketplace. In a very real sense it is not going to exist in the marketplace. The NBN will be a new government owned monopoly, and all potential direct fixed-line competitors to it will be prevented from competing by a legislative or contractual constraint. That is even true for Telstra's HFC pay TV cables, which pass almost a third of all Australian households, and which could provide NBN-level broadband service almost immediately if the owners were provided with the appropriate incentives and regulatory environment. That is not what is happening. There is no competitive involvement at that level: it is NBN or nothing. It is in a very real sense the riskiest available option to the Australian taxpayer. We know that the contracts NBN Co. is planning to sign to get the NBN constructed are extremely risky. By shifting to a cost-plus model NBN Co. has shifted a large and unquantified amount of economic risk onto taxpayers. It is taxpayers who are in the main liable for any cost blow-outs—so much for the government's ridiculous previous claims that 14 major Australian construction companies which failed to meet its price target were colluding in an attempt to gouge taxpayers. Not so.
And we know that NBN Co. is no longer just a carefully regulated wholesaler providing a last mile level playing field where other carriers compete, as the government initially promised it would be. Instead, we find it muscling into new activities and displacing private sector rivals in areas as diverse as broadband infrastructure at new housing estates, communications needed by defence agencies and many services that existing carriers sell to large corporations. Mission creep is what is happening here, and it is a very easy thing to occur when you can access as much money as you want at the government bond rate. Again, this concept is changing. It is changing all the time in scope, in cost, in structure and in leadership as we look at the reshuffle that is going on at the moment. All of these changes demand some rectitude in the overview provided by the government and other regulatory bodies about the way in which it proceeds.
To justify the vast expansion of the public sector and the overturning of decades of bipartisan agreement on the merits of private ownership of business operations, unfettered competition and competitive neutrality between public and private entities, the government points to the economic and social benefits of broadband—on that there is no dispute. Senator Stephens spent a lot of her speech talking about the wonderful things that broadband will do—film studios in Broken Hill, schools being able to do things they could not do before and e-health strategies and so on. All of that is agreed. But I could come forward to Senator Stephens and describe the wonderful benefits of a Maserati motor vehicle—what great things it can do that an ordinary Holden Commodore cannot do, how much faster it can travel, how brilliant the wheels are and what other fantastic things it does. The question that Senator Stephens has not asked herself is: how much is it going to cost, is it actually what we need, and can we get from A to B more affordably? This is a very real point to make, because we know that the biggest impediment to universal internet access in Australia is cost.
It is very largely in lower socioeconomic groups that internet access is least penetrating, and the more elaborate, the more gold plated, the more expensive the model the government chooses, the more those very sorts of people are going to find it harder to access this new National Broadband Network. So to talk about the wonderful things it does is, I think, not the point. The question that Australians need to have answered is: how much is it going to cost us? I have no doubt that any particular community you point to and say, 'We can roll out this NBN to you; when do you want it?' will say: 'Yes. Do it now. We want it yesterday.' But, at the end of the day, the question is not what they want now; the question is what they get and how much they are prepared to pay for it. Those are the questions that this legislation would be able to help answer, but with opposition from the government they may not get answered.
Senator Stephens referred to the NBN as being not a cost but a benefit. Indeed, in one sense it is, but you cannot divorce the cost from the benefit, and we need to know what those benefits are and how much they will cost us. She made the point about the NBN being unobtrusive. I refer to my remarks yesterday in the chamber, where I said that unobtrusive depends very much on the manner of rollout. The NBN regime will have the capacity to provide rollout in essence in any way that it wants. Although yesterday we dealt with legislation that provides for the infrastructure to be rolled out in greenfield estates in a way which is, in Senator Stephens's words, 'unobtrusive', the same guarantee cannot be provided with respect to rollout in existing residential areas of our cities and towns, because NBN is essentially able to override local planning regimes, and the capacity to do great damage to the aesthetics of local communities remains there. I particularly refer to my remarks about what was happening in the ACT, where we have a longstanding custom of no overhead wires between the street lights or the power poles running up our streets—but that may change. It could change under the NBN. Today I repeat my call for the minister to assure us that that will not occur. I would be very happy to receive that assurance and be told that I am scaremongering, but until I hear it I am going to continue to make this point.
The fact is that the Labor government has rushed forward to do what it needs to do for political purposes, and the proper assessment and evaluation of alternatives simply has not taken place. I note that in 2007, when Mike Quigley was still at Alcatel-Lucent and had to face shareholders who were not legally required to hand over money at taxpayers' expense, the company put out a white paper titled Deploying fibre-to-the-most-economic point. Not surprisingly, he concluded it does not always make economic sense to lay fibre all the way to homes in existing networks.
In fact, the paper concluded:
… the economics of FTTN are hard to resist, given cost points that can be 50 percent or less than those of PON—
or passive optical networks. In fact, this very architecture is currently being rolled out across many parts of the world. In the UK, for example, we see British Telecom planning to connect over six million households to next-generation fast broadband using fibre to the node and only two million households using fibre to the home. I have to say that it is extraordinary that the Labor government not only has refused to contemplate this architecture for any of its NBN but is in the process of signing a deal with Telstra that will actually make such a design far more costly than it needs to be should a future government of either side wish to pursue a more affordable and less disruptive architecture. This is not the way in which a government should lay the foundation for a flexible network capable of adapting to changes in market demand or technology. That is very much not a feature of the NBN.
I note that the leadership of the NBN is changing in a way which, to be perfectly frank, does not inspire a great deal of confidence. Major changes were announced just yesterday, and some of this was supposed to have been scheduled and planned, but it does not look like that. I have to say that I agree with the opposition's communications spokesman, the member for Wentworth, who described the NBN project as 'chaotic'. He said that NBN Co. had already lost two senior employees in the construction division after an earlier tender process was abandoned and still had to sign construction contracts for many second release sites. He said:
This is an organisation which, at last count, had more employees than customers so the workload can hardly be to blame for the shake-up … It is an organisation employing 47 executives on salaries of more than $300,000 a year, so the NBN Co can hardly claim that it is working in an environment of restrained resources.
Those concerns, while not definitive of the problems at NBN, ought to leave Australians in a position of wanting answers—answers which, of course, they cannot receive because this government has not commissioned the Productivity Commission to do a thorough cost-benefit analysis. That is the point of the National Broadband Network Financial Transparency Bill 2010: it is to give Australians that assurance that the homework has been done before the money is spent. If anything the changes of recent days—the changes to the scope of the project, the changes in leadership and the changes in the anticipated cost of the project—lend themselves more and more to a full, appropriate, arms-length assessment of what is going on. For that reason I think it is imperative for the Senate to consider its responsibilities to the Australian people and ensure that this project gets that analysis.
I suspect that in only a few years time it will be possible for those of us who sit around this chamber at that stage to point fingers—presumably all from one side of the chamber to the other—saying, 'Everything you said about this didn't come true.' I hope it is going to be my side of the chamber that is pointing to the other side and making that accusation, but, whatever the outcome, I can say with some confidence that at least if a cost-benefit analysis had been done we would not have had to operate in that field of doubt. We would not have had to proceed on the basis of a wing and a prayer: 'Let's hope this works. We like the product; let's see if we can afford it at the end of the day. We think it might be great, but we just don't know.' All those questions are unanswered and, at the cost of $50 billion to the Australian people, I do not feel comfortable not being able to answer those questions.