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Thursday, 17 June 2010
Page: 3600


Senator IAN MACDONALD (10:07 AM) —At the beginning of my contribution, and as the current and final chairman of the Senate Select Committee on the National Broadband Network, I want to particularly thank my colleagues on the committee and the first chairman, Senator Mary Jo Fisher, who, as Senator Ludlam has rightly said, did put a certain style and a certain expertise into the work of this committee. It was a committee that was blessed by having, apart from myself, committee members who really understood the issues and contributed some real expertise and understanding to the debate. As well as Senator Mary Jo Fisher, I also want to mention Senator Kate Lundy, Senator Scott Ludlam, Senator Fiona Nash—the deputy chair—Senator Simon Birmingham and Senator Glenn Sterle, all of whom made a very significant contribution to the quite detailed and lengthy work of this committee.

I also want to comment on and thank particularly the secretariat staff who have assisted the committee very substantially over the term of the committee’s existence—the secretaries, originally Alison Kelly and Stephen Palethorpe and currently Dr Ian Holland; and the support staff, currently Ms Fiona Roughley, the principal research officer, and Ms Christina Tieu. We are very fortunate to have Ms Roughley, who has some expertise in this area and also legal expertise—coming to us with a very significant legal background. The help given by all of the secretariat staff was particularly useful.

I highlight that, in its final report, the committee again confirms its view that the Rudd government should scrap this $43 billion project. The whole history of the National Broadband Network has been a fiasco for this government from day one. I will not go through the history—it is all set out in the five reports of this committee. But I think it is telling that answers to questions we placed on notice with the ACCC at our last hearing—answers which came to us only late last night—make it clear that the ACCC has cast doubt on the government’s method of financing the NBN, and that casts even further doubt on whether the NBN would ever be built. Using the most diplomatic language possible, the ACCC said:

The internal rate of the return of a project or a firm is a different concept to the regulatory weighted average cost of capital and is not a concept that has been accepted by the ACCC in making its regulatory decisions.

The ACCC went on to say that financing arrangements could adversely affect competition in the internet industry, saying:

NBN Co.’s financing arrangements could potentially have implications for competition in markets in which NBN Co. operates as well as downstream markets.

It is clear that the 27 full-time employees of the ACCC who have been working on this NBN project have very serious concerns about the methodology used in the NBN implementation study and the consequences for competition in Australia.

I think Senator Ludlam was balanced in his description of the evidence we heard throughout our inquiry. Some people who gave evidence were wildly in favour of this project, but I have to say that my calculation is that most of the witnesses expressed the sort of concern that the committee has ended up reporting on. Certainly Australia needs a national high-speed broadband network. But whether this model is the right one is the question that has been the subject of this inquiry and particularly the last couple of reports of this committee.

The report is there for everyone to read, but there are very severe doubts that this project will ever reach fruition. There are serious doubts about its financial efficacy. There are very serious concerns that the optimism expressed by the Minister for Broadband, Communications and the Digital Economy and the Prime Minister in saying that this broadband network would become a commercial enterprise and would pay its own way is not justified—and that was pointed out in the various hearings of the committee and in the committee’s reports. The implementation study, for which Australian taxpayers paid $25 million, was done halfway through the rollout of the NBN. Of course, any reasonable person would understand that it should have been done at the beginning of the process.

There has not been a cost-benefit analysis. Why will the government not do it? We were told at our last hearings that, following the implementation study, all of the information and detail necessary to do a cost-benefit analysis was there and that all that had to be done was for Treasury or Finance to feed that information into their models and you would have a cost-benefit analysis within a few days, we were told. And if the government for some reason did not want the Department of Finance and Administration and the Treasury—with all their resources—to do it, a very significant Australian economist, Dr Ergas, said that he would do it for free and that it would take only a few days to do. Why would the government not take up that very generous offer—unless it had something to hide? I think it is quite clear that the government does not want a cost-benefit analysis because it knows that it will not stack up.

We learnt in the committee hearing and at estimates that NBN Co. in Tasmania—currently rolling out and to be officially launched on 1 July, in a few days time—is actually giving away its services on the network to the retail service providers so that they can compete with the existing networks. How good a competition is that? We learnt at estimates that all NBN were charging—and it is really not money going to them—was $300 to fix-in the box in every premises and that NBN was not going to charge anything for its network for a period of time. It is clear to me that unless the government succeeds in destroying Telstra and other retail service providers NBN Co. simply cannot compete at a cost of $43 billion—and that is the problem.

The committee believes that a network certainly is needed but that there are better ways of doing it. As an aside, if the OPEL contract which was signed way back in 2007 had gone ahead, most of Australia would currently have that fast broadband network. But Senator Conroy and the Rudd government capriciously cancelled that contract—I think, only because it was not their idea—and came up with this $4.7 billion contract, spent $20 million doing a request for tender process and then worked out that what they were talking about was all rubbish. They cancelled that and came up with the great idea of spending $43 billion of taxpayers’ money on this network, which nobody believes will operate commercially and which will continue to be a drain on the taxpayer for many years to come.

We have not been given any of the information we needed to look at the proper financing of this. NBN Co. is going ahead with the rollout even before it has received the implementation study. The whole process is typical of the Rudd government’s mismanagement and inability to properly run anything they touch, and I fear that the NBN process will end up in disaster and tears.

This final report and all the previous reports are useful contributions to this very complex debate. I recommend all of the reports to anyone at all interested and I conclude by thanking, particularly, the secretariat staff and my colleagues. (Time expired)