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Monday, 22 November 2010
Page: 1792


Senator McGAURAN (6:10 PM) —I join this debate, on the issue of the moment, on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 or, in its short version, the ‘screw Telstra’ bill. This is a bill born out of threats and intimidation, arrogance and desperation by the government. I see Senator Sherry shaking his head.


Senator Sherry —I was concerned about your earlier terminology.


Senator McGAURAN —Well that is exactly what it is. There are two million Telstra shareholders, Senator Sherry, that would agree with me. That is the plain language. That is all that this bill deserves—a bit of plain speaking. It would not hurt some of you across—


The ACTING DEPUTY PRESIDENT (Senator Barnett)—Order! Senator McGauran, you will address your remarks through the chair and you will ignore interjections across the chamber. I draw Senator Sherry and other senators’ attention to that.


Senator McGAURAN —This is a bill, I will repeat, born out of threats and intimidation by a desperate government towards one of Australia’s internationally labelled companies, one of Australia’s largest companies. It has, I believe, some two million mum-and-dad shareholders, so it is one of the largest dispersed shareholdings in Australia. This government is legislating to break it up, Venezuela-style. This is unprecedented in Australian history. It has sent a shudder through the market, and Telstra shares have duly been affected.

The government are attacking a privately listed company, forcing it to be broken up, for one reason: to prop up their ailing federal election campaign policy, their field of dreams. This legislation will hit the telecommunications market’s confidence. Senator Back, before me, talked about the integrity of the whole market nationally and internationally. Do not think they are not watching this, and do not think future investors will not be scared off by this. This is an unprecedented step in corporate bullying and, rest assured, it will eventually backfire on the government. The legislation, whilst compensating Telstra to a degree—some $11 billion—effectively hands over Telstra’s infrastructure, all its pits, and ducts and backhaul fibre, so that the NBN Co. can exclusively use it to lay their fibre. The legislation before the Senate is a valiant attempt to plug just one of the viability leaks that the NBN Co. has sprung. Without the exclusive use of Telstra’s copper infrastructure network, the government policy of laying the broadband network to some 90 per cent of households would simply implode.

This will not save the NBN Co. The scheme is already starting to sink, and I make a prediction. As I have said on other pieces of legislation, I have to make my predictions early. Most likely, this time next year the company will signal its distress—along with the minister’s distress. Firstly, take the implementation report, the McKinsey report, for which McKinsey were paid—although I do not want to be sidetracked by how much consultants are paid by this government—an incredible $25 million. I would like to know—perhaps I will have to wait until estimates—whether that is not one of the highest consultancy fees ever paid.

We have been denied access to the business analysis and there has been no cost-benefit analysis but we can garnish from the implementation report, the McKinsey report, certain business facts and realities. The McKinsey report established a rate of return for the company of, at best—it was going to give a glowing report—eight per cent, provided there was a 90 per cent take-up and provided the company borrowed at risk-free bond rates. That was the standard that had to be set for the company to return even an eight per cent rate. Well, you can kiss private investment goodbye if that is the return rate for such an outlay on such assets. But besides that, just for the NBN Co. alone—the government-owned monopoly alone—the assumptions were of eight per cent on a 90 per cent take-up on a very low borrowing rate. That is the cornerstone of the viability of the company. All the assumptions are utterly flawed.

Take Tasmania, where they are rolling out the fibre, as an example. To date there has been a take-up rate, I have been informed, of as low as 11 per cent. We do not know how much of that 11 per cent are 100 megabytes, or even whether it is the whole 11 per cent. In response to this viability leak the government want the states to move legislation to prop up this ailing NBN Co. They want the states to move an opt-out clause: you will get your fibre whether you like it or not unless you sign an opt-out clause. Tasmania has agreed to force people into take-up but, rest assured, I hear the other states are not. They are extremely reluctantly to do that.

Can’t you see the mire that is being created? Every time there is a viability leak in terms of this company the government has to move legislation to fix it. The second thing garnished from the McKinsey report regarding the viability of the NBN was cost blowouts. The McKinsey report did not factor in any cost blowouts but there are cost blowouts all around the government. They must be petrified about how much this is really going to cost them. The first blow-out is in relation to new properties in housing estates. Confusion reigns. Who is going to pay—the developer or the government?—for the connections in the new housing estates? Before the election the government said—naturally they said it before the election; they said a lot of things before the election—that the government, the NBN Co. would foot the bill for the new housing estates. Now we are told that the government are considering—guess what?—more legislation to plug up the viability leaks of NBN Co. They are considering legislation to force the developers in new housing estates to put in the connections.

But it gets worse in regard to the blowouts in terms of old multi-dwelling units—the big housing apartment blocks. The NBN Co. have said that they will refit and rewire these old apartment blocks. I am not talking about those two- or three-storey seventies blocks; I am talking about multistorey buildings. In fact, I am informed that those buildings make up one third of Australia’s dwellings. The NBN Co. never factored that in. It is not factored into their business plan; I am sure of it. I will tell you why: when asked, they duck for cover. That is the surest sign that they have not factored these cost blow-outs.

And there is another cost blow-out coming. The unions are circling the company. I am not surprised at all. The ACTU is circling the NBN. They want their slice of the collective bargaining too. It may be like the Victorian government’s Royal Children’s Hospital or the desalination plant. The unions got hold of those two government projects, shook them down and increased the cost of construction enormously. They probably doubled the cost. I am willing to say it doubled; someone can prove me wrong. If anything like that happens then NBN Co. is in for a big blow-out when the unions want their slice of this cake. And they will get it too. Let me tell the directors of the NBN: you will not get any hope or satisfaction from the Labor government; they will cave in as quickly as they can. After all, it is only taxpayer money! Do not think Senator Conroy is going to defy the union. Do not think he could put up with a strike on the premises of the NBN or a slowdown of the rollout because of the union. That is another cost blow-out on its way, and none of these has been factored in. All the figures are rubbery.

This is a waste of unimaginable proportions. I heard that the minister at question time was even playing down the figure. It is not $43 billion any more; our contribution is actually less. Is it around $26 billion?


Senator Fisher —So they say.


Senator McGAURAN —They now say that it is $26 billion but when they first announced this project they could not put a high enough figure on it. It was $43 billion, all right, and they boasted about that, but now it is down to $26 billion. What is the difference? The difference is that they are saying, ‘We’ll get private investment into this.’ They say that the costs are not as high as they were going to be but I have just proved that all these blowouts will push it past that figure.

And the government are not going to get any private investment; that is a field of dreams. No investor worth their salt would come near this company—not now and not in five years, when the government pretend they will privatise this company. The government were shameless in announcing that it would cost $43 billion. The figures are rubbery. They are just playing with figures on a day-to-day basis, hoping to get through the politics of the matter each day. But it is all catching up with them, and they know it.

Here is another possibility regarding the NBN that we can garnish from the McKinsey report. I happen to think the McKinsey report was not too bad at all. It told us a lot. I cannot wait now for the business plan to come out next week, because we got so much information from the McKinsey report we are sure to get more from the business plan. I am not listening to Senator Conroy saying it all stacks up. He will say anything on a day to day basis to get through the politics of the day.

We have proved the misrepresentations and falsehoods time and again. I should add that this does not just come from Senator Conroy; it comes from the Prime Minister herself. She stood up in the parliament last week and said that the connection of the NBN to 90 per cent of households—if it gets to 90 per cent—is going to bring internet prices down. Do you know what the McKinsey report told us? It told us that internet prices will have to go up every year to keep the viability of the company. This is a company that is going to be increasing its internet prices to Australian households. That is the way monopolies behave, by the way. There is nothing unusual about that. For it to maintain its viability, the characteristic of any monopoly is to increase prices year in, year out. Yet we have the Prime Minister telling us that the prices will fall. There is a conflict there—and I know where the truth lies.

It just so happens that only 43 per cent of Australian households at the very low income level of $40,000 to $45,000 are connected to the internet. The main reason the rest of them are not connected is cost. It is a cost factor. That is why they do not take up the internet. So now the government is going to take any competitiveness out of the market. It is going to take away any chance these lower income households have of connecting to the internet. It will strip that away from those lower income households because prices on the internet will go up every year. That is according to the McKinsey report and we will see it next week in the business plan. Prices are not coming down.

I really think that Senator Conroy must have been dreading the day that he jumped on the former Prime Minister’s aeroplane just so he could talk to him and cook up this new scheme. Can you imagine it—two big egos at high altitude? The greatest infrastructure plan in Australia’s history, they were going to dub it when the plane landed. It is uncosted, to date. Senator Conroy has been left holding the baby, not even valiantly. He is becoming shrill. He is becoming manic about his defence in all of this. But it is also irresponsible. There is no accountability. It verges on corrupt behaviour towards taxpayers’ money. His fortunes are hooked to this, as is the government’s, because this is the biggest lie since the ETS. In fact, this is another ETS. In the first term you had your ETS and now you have your NBN. Remember the day Senator Wong stood there, loud and vicious? It is a bit like she was today—loud, tough, aggressive Senator Wong defending the ETS to the death. All the rhetoric was blown up to the point where it was said, ‘This is the greatest moral challenge of our time.’ Then the truth dawned. Then they lost a Prime Minister over it. But they have learnt nothing. They have a new ETS around their necks. They are at it again—a minister and a Prime Minister—and their rhetoric matches that of the ETS. Where the ETS had the greatest moral challenge of our time, we have a new one. The new Prime Minister has said the NBN will bring internet prices down. That is the new big claim: it will bring prices down. We know it will not. This will all finally flush through the system. You had your moment in the sun about the ETS. We sceptics on this side were feeling a bit battered and bruised at certain points, but then the truth won out. You got mugged by reality. The McKinsey study has proved it all to us. Perhaps the $25 million was well spent. Perhaps I was a bit hard on McKinsey and Co. I see it has another job. I do not know how many millions that will get it, but—boy! —McKinsey and Co. do very well out of the government. Perhaps the $25 million was well spent.

If you think the pink batts scheme was idiotic and Mr Garrett irresponsible, and if you think the Julia Gillard memorial halls were negligent waste, you have not seen anything yet. This tops the lot. They are dubbing it the greatest infrastructure project in Australia, at $43 billion, and that does not even include the certain blowouts that are on their way. This is beyond farcical. We have a minister, more known for his factional capabilities than his managerial capabilities, who is completely delusional. He has lost all sense of national responsibility. Perhaps he has been told to do it. And then all the Chauncey Gardeners follow in from the other side. They just want to be here. They espouse the lines of the NBN like they did with the ETS. They are all Chauncey Gardeners. They do not care about the reality of spending $43 billion of taxpayers’ money. They are given their lines by the whip. They cannot even deliver them with any excitement, to tell you the truth. There is a lot of drabness coming from the other side. There is no sense of national responsibility. In the end, all this will implode on them. We will keep chipping away and in the end it will all implode.

The media are picking it up. The leaders of society in responsible positions are now coming out. The responsible journalists are all coming out now. That is just the beginning, and then it will sweep through the community because they will see you spending $43 billion, Senator Sherry, whilst their living costs are going up. They will be wondering why you are wasting their money. They could not put up with the pink batts, they could not put up with the memorial halls and they will not put up with the broadband if they think it is waste—and it is going to prove to be wasteful.

This is a debate that has been going on for the last two weeks of parliament and it is really starting to filter through. Don’t think it is not, Senator Sherry. You can live in denial. I think you have even given up on your own government. You are bored with government. The great honour and responsibility of government is being wasted by those Chauncey Gardeners on the other side. We always believed in what we did.


Senator Sherry —If I wasn’t crook I’d be having a real go at you!


Senator McGAURAN —Have a go at me, if you want to—I have been trying to provoke you during the whole debate! You have given up. You cannot defend the indefensible, and that is the stage we have reached. This is more than a political issue. This is an issue of responsibility, just like the emissions trading scheme was. When we really believe, as we do, just how flawed this scheme is, we are not just playing politics. (Time expired)

Debate (on motion by Senator Sherry) adjourned.

Sitting suspended from 6.30 pm to 7.30 pm