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Wednesday, 24 November 2010
Page: 2011


Senator BOYCE (9:40 AM) —I would like to follow on from the comments that Senator Cormann has made on the common sense that should be applied to the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, to the business case and to NBN Co. across the board. I do not think we have seen common sense since early 2009, when the then Prime Minister, Kevin Rudd, announced as something of a thought bubble that Australia was going to have, amongst many other wonderful things that no-one else had, the very best broadband network in the world. I make the point that the coalition is absolutely committed to making fast and affordable broadband available to all Australians, regardless of where they live. It is just that we do not think NBN Co. is the way to do it and we do not think that this government has a clue as to whether this is the way to do it. It is simply a horse that they have got on which is galloping off, and they cannot work out how to get off.

I note that the Australian people, many of whom have rejected the opportunity, at great cost, to be involved in the new broadband system, have a lot more sense than this government in this area. I quote from a letter to the editor in the Australian today. It says:

I wonder if Senator Conroy would agree to tie his parliamentary pension to the economic success or otherwise of his National Broadband Network.

Heavens to Betsy; someone wants to actually hold the Minister for Broadband, Communications and the Digital Economy accountable for what he is doing but, no, the government certainly does not want to. I am also a bit concerned that apparently the Prime Minister now believes that Senator Conroy is not up to the job of negotiating this. She has had her own meetings with Senator Xenophon and Senator Fielding in a last-ditch, desperate attempt to convince them—without a business case, without signing documents that would have bound them to secrecy for seven years or whatever the last date was—to just trust her on this. Why on earth would anyone trust Senator Conroy or the Prime Minister on the NBN Co. issue?

The challenge here is to develop an affordable, effective broadband system, a fast broadband system that minimises expense to taxpayers and ensures that all Telstra shareholders are treated fairly and equally. We do not have the evidence for either before us know. We are told we can have the government’s response to the business case on 17 December. As I said in this place yesterday, we do not really care when we find out about the business case but we will not pass the legislation until we do, because we cannot analyse the cost-benefit to Australia. On every scale that is currently available to look at, there is no reason to believe that it has been done well. If you go back to the introduction of it, when it was a thought bubble with no business case, no plan, no strategy, developed by then Prime Minister Rudd and Senator Conroy, it was just a wish. If you keep looking, you see that the government is putting all of its bets on one technology—in fact, in a bizarre way, paying Telstra to replace Telstra’s own current technology in parts of regional Australia. What a bizarre proposal. Does this make you want to trust this government? Does this make you trust that they know what they are doing? It goes on and on. There is no cost-benefit analysis and, until there is, the Australian people, and certainly the coalition, cannot accept that this is the way to go.

We look at body after body which could have assessed this program for the government. There is the Productivity Commission. We are still saying: ask the Productivity Commission to look into it. The Productivity Commission are absolutely the right body to look into this. The government have referred dozens of other programs to the Productivity Commission to do an insightful and forensic analysis of the costs and benefits. Why not this one? Why will they not put this one to the Productivity Commission? Another body that could have looked at this proposal and given us a practical, thoughtful, experienced response to it is Infrastructure Australia and yet the costs and benefits of the biggest piece of infrastructure ever proposed in Australia are outside the remit of Infrastructure Australia.

All we want is to establish the facts and to allow an impartial body to assess whether this investment—just remember it is the largest investment of taxpayer funds ever—is a good idea. The business community along with the general community want a cost-benefit analysis of this National Broadband Network project. The ANZ chairman, John Morschel, has said:

… the lack of a business case and full publicity of that business case is throwing a lot of doubt in people’s minds about the level of expenditure.

Just remember we are talking about $43 billion here. The chairman of Wesfarmers, Bob Every, has said:

I’m not convinced, and feel it needs a cost-benefit analysis …

We have under-invested in infrastructure for the last 30 years, in road, rail, water. I just see this as another part of infrastructure that we need to go through, stocktake and prioritise. And I do not know if it—

‘it’ being the NBN—

will rank in priority.

This is the chairman of Wesfarmers, one of Australia’s biggest companies. He is not, as Senator Conroy would have us believe, crying out for faster broadband. It is just not happening. I think the most bizarre comment of all from the minister, Senator Conroy, is that it would be ‘too costly’ to have an inquiry by the Productivity Commission into NBN Co. How bizarre. What will it cost? Let’s pick a figure, say, $10 million. The Productivity Commission has said it has enough money in its current $36 million budget to do it. They could do it. That is fine.

We do not know, of course, how much the government has paid for its last little foray in having an analysis of the analysis in terms of having outside oversight of their business case, but we do know that they spent $25 million alone with McKinsey KPMG on an implementation study which, as has been worked out by one of my colleagues, was $46,000 a page. I think the Productivity Commission could probably bring it in at a slightly lower page rate than that. Yet we have a minister, who wants to spend $43 billion, telling us that it is too expensive to get the Productivity Commission to do a study of whether the $43 billion is being well spent, what the outcome will be, whether it is an effective use of taxpayers’ money and whether it will stand up in the future. No-one knows what will stand up in the future, but the Productivity Commission is the best possible organisation to ask about the implications of this project. They can factor in non-financials as well as the other potential benefits of spillovers.

As I said earlier, the coalition has absolutely no problem with fast, effective, affordable broadband. It is our policy to do this. It was our policy to do this in a sensible way. We did not want a Rolls Royce with bells and whistles. We were of the view that a Holden or perhaps a Ford would do the job but, certainly, an Australian made and sensible solution, not some sort of put all your eggs in one very, very expensive gold basket solution, which is what we have with Senator Conroy’s project. I would like to note that the Secretary to the Treasury, Ken Henry, in September last year said:

Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing. That is, when taxpayer funds are not put to their best use, Australia’s wellbeing is not as high as it otherwise would be.

I continue to be very concerned that we have this massive spend on a new technology that may very well be completely out of date within 20 years, which is when the minister seems to think we should be progressing on this subject.

The coalition, of course, has some extraordinary concerns about the structure of NBN Co. We were the government that broke up what was a massive government owned monopoly, Telstra. Why on earth would we assist this government to establish a new and massively more expensive monopoly? The government are setting up a massive monopoly that is so anticompetitive that they have had to exempt it from the Trade Practices Act. Telstra will be contractually obliged not to compete with NBN Co. in order to protect NBN Co.’s revenues. ‘Um, um, um,’ is all anyone can say to this. How bizarre! Telstra will not be providing telephone or broadband services across its HFC pay television cables, yet that is the only existing network in Australia capable of delivering 100 megabits—a network that passes almost 30 per cent of the nation’s households already. No, we will not go for a Holden solution which would use the infrastructure that currently exists where it exists and make sensible use of innovative and new infrastructure where that would be an affordable and sensible solution. No, the government want to proceed on and on with their Rolls Royce.

The NBN is going to be an eight-year, $43 billion project. Surely that deserves a very rigorous cost-benefit analysis. The government and Minister Conroy were at pains numerous times yesterday to tell us about the three-year corporate plan and the 30-year business plan. I am very pleased that this group has a 30-year business plan. I would have been quite comfortable with a 10-year business plan, because of course the technologies that we will be using in 30 years are quite probably not known right now. The speed at which technology is moving forward in this area means that we simply do not know what will be the most affordable and effective means of establishing communication networks into the future.

The government, of course, would have us believe that there is a cost-benefit analysis and they have done it. We just want to see it. This may be very untrusting of us, but we would like to see this cost-benefit analysis. The government might say, ‘Just trust us.’ There is nothing that they have done to date that would make us think that we should do so. The project is being rushed through by the government in the way they rushed through the home insulation scheme, a disaster; the Green Loans scheme, a disaster; and the school halls scheme, the so-called Building the Education Revolution program, which was a waste of money in many, many areas. The taxpayers of Australia did not get value for money out of that program. They got bizarre outcomes where halls were pulled down to put up smaller halls and the like. There were schools with two halls but no library. No-one had any problem with expenditure to assist the development of schools in Australia, but once again this government, with their inability to implement and to understand business, have produced failure after failure after failure and simply wasted the money.

As the writer from Queensland said in that letter to the editor that I mentioned earlier, what about tying Senator Conroy’s pay to the losses or profits of NBN Co.? What about having a performance dividend? Let us look at that. If we tied former Environment Minister Garrett’s pay to the performance in the home insulation area and the Green Loans scheme, I suspect he would be paying us to let him work here now. If we looked at the wastage in the school halls scheme, I think the Prime Minister would certainly be earning about 50 per cent of what she earns now. They have not been successful.

We on this side will not agree to or acquiesce in this legislation without a cost-benefit analysis being done. Primarily this needs to be done by the Productivity Commission. Projects of this size and scale require the necessary oversight and consideration to see that they are being carried out in the most efficient and effective way. You would think that by now the government would recognise this. One does not mind if a new government learns by the odd mistake. It is when a new government has mistake after mistake after mistake and apparently learns nothing that we are in trouble.

This is, as I said earlier, the largest single investment in Australia’s history, and the government tell us it will make a fantastic contribution to the economic activity of Australia, but they have given us no examples and no tangible evidence of how they support this claim. Most of the applications and uses for the NBN that actually add to economic productivity are available on the ADSL2 broadband speeds that we have right now. Certainly let us look at using innovative technology to move to faster and faster communications in the future, but why would you do it in such a way that you have no idea whether it will be overtaken by other technologies, what the effect of it will be and what the costs and benefits of it will be? The government simply do not know.

We cannot assume that the business case they have so secretly hidden away gives them joy, or they would have released it by now. They know how much pressure there is from the Australian taxpayer to find out whether this is a good spend or a bad spend, yet they continue to hide the business case away on the basis that they have to go through it with a black pen to make sure no commercial-in-confidence material comes out. I would have thought that, irrespective of its size, it could not take more than a week—and the government have now had more than two—to do a little black-out exercise on figures that you wish to remain commercial-in-confidence. The government know there is pressure for the release of this, and they are refusing to release it until after the legislation has been passed. The only assumption that I can come to, and one that the Australian taxpayers are increasingly coming to, is that the figures in the business case do not add up and do not provide costs and benefits that are worthwhile for Australia and Australians. Without that cost-benefit analysis, we are opposed.