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Wednesday, 24 November 2010
Page: 2015


Senator BRANDIS (10:00 AM) —I think it is time in this debate to restate and to remind the government of a couple of basic constitutional principles. The first of those principles is this: that it is for the parliament to decide and approve the expenditure of public money. And when there is a very large expenditure of public money it is all the more important that the parliament be fully informed of the reasons for that expenditure so that the parliament can form a view as to whether it is a prudent and efficient use of public money.

In the case of the bill before the chamber at the moment, the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010, we are discussing not merely the expenditure of a very large amount of public money; we are actually discussing the largest expenditure of public money on a single project in Australia’s history. Let me just say that again, because in all of the heat of this debate that point risks being lost: this is the largest expenditure of public money on any project in Australian history. Apart from expenditure on war this is the biggest single thing Australia has ever undertaken. It is the allocation of $43 billion, and that is assuming, by the way, that the government’s figures are reliable. There are many industry experts who say that that grossly understates the amount of public money that it will cost to build the NBN. But taking the government’s own figures as the basis of this discussion—taking them at their word—even on the government’s case this is the biggest single thing Australia has ever done in peace time.

So you would not think that it is an outrageous thing for the parliament to demand of the government that the business case stacks up? It is not an unusual thing for the parliament to demand of the government that it take the parliament, and through the parliament the Australian people, into its confidence about why this particular model was chosen and why this model should be preferred over the range of alternative models. And yet the government arrogantly and dismissively, with utter contempt for parliamentary process and democratic values, refuses so much as to consult the parliament about the business case and the economics for the largest single project in Australian history.

Let me remind you, Madam Acting Deputy President, of a second principle, and that is that it is the obligation of ministers to abide orders of this chamber. And yet the minister responsible for this project, the Minister for Broadband, Communications and the Digital Economy, who is so clearly out of his depth that he is the laughing stock of the industry, was ordered on 17 November 2010 by this chamber to table in the chamber the National Broadband Network business plan and the government’s response to the McKinsey & Company and KPMG implementation study; the business plan being the fundamental document setting out why this particular proposal stacks up commercially and the government’s response to the McKinsey and KPMG implementation study being the government’s own appraisal of the expert assessment by those two professional firms of the way in which this vast project is to be implemented.

But this minister, showing open defiance and contempt for this chamber, has simply said, ‘Well, I refuse to abide the order of the Senate, because I think it is reasonable for the cabinet to consider these documents at greater length before I table them here.’ The minister’s opinion is irrelevant because this chamber, a chamber of which he is a senior member, has already expressed its opinion and it has made an order. A senator who is not prepared to abide an order of the Senate is unfit to be a senator.

The entire history of the development of the NBN has been a history of confusion, incompetence and concealment. The reason there is so much concealment is, I think, that the minister, who is plainly out of his depth, thinks he can try to protect from the critical gaze of the parliament the litany of incompetence for which he is responsible. When we in opposition put questions day in and day out to the minister, Senator Conroy, in relation to this, the most eloquent statement about the government’s handling of this matter is not to be heard in the minister’s attempts to obfuscate and filibuster answers to our questions. The most eloquent statement is to be seen in the mute, sullen and embarrassed silence of his colleagues as this out-of-his-depth minister—this lightweight minister—struggles unsuccessfully to get on top of this project.

The biggest thing that Australia has ever done in peacetime has been placed by this government in the hands of a man who has no business experience, limited intelligence and, frankly, lacks the maturity to deal with a matter of high public policy involving at least $43 billion of taxpayer’s money. Senator Conroy is like a kid with a great big train set. He is incapable of taking seriously the gravity of the responsibility with which he has been charged, and it is no wonder that the public, the markets and his own colleagues have lost confidence in his capacity to handle this.

I spoke a few moments ago about concealment. We know that the business plan was delivered to the government on 8 November: Monday, a fortnight ago. We know that it is a 400-page document. We expect that this 400-page document will contain a degree of technical material. We would expect that it would contain some commercially confidential material. None of that is surprising but, Madam Acting Deputy President Fisher, I know you, like me—indeed, like Senator Johnston, sitting beside me—have been a legal practitioner in your earlier life. You know that a competent professional can get across a technical document so as to identify commercially confidential material and you know, as anybody who has practised in this field does, that that is an intellectually difficult task but it is not something that takes two weeks.

The senior public servants in Senator Conroy’s department who advise the government, I know from my time as a junior minister in the department in its earlier form, are some of the most excellent minds in the country. It is not credible that it has taken more than two weeks for those people to have mastered the technical detail in a 400-page document and to have identified so as to redact any relevant commercially confidential information. It is a task that would take a skilled mind perhaps a couple of days of concentrated work—but not a fortnight. This claim of commercial confidentiality is a ruse. It is a pretext. It is a lie. It is not merely the business plan which this minister and this government, for fraudulent reason, seek to withhold from the scrutiny of the parliament before the parliament rises for the Christmas recess tomorrow.

We learned yesterday that, as well, the government has commissioned another study to examine the business plan itself. That is a study taken by Greenhill Caliburn, a very well known and respected corporate advisory firm. We in the opposition have obtained a copy of the service contract between the Department of Finance and Deregulation and Greenhill Caliburn. Before I go on to talk about what the service contract provides, let me just make the point which my friend Senator Cormann made yesterday in question time: isn’t it interesting that it was not the Department of Broadband, Communications and the Digital Economy that commissioned the Greenhill Caliburn report, but Senator Wong’s department, the Department of Finance and Deregulation?

As you know, Madam Acting Deputy President, it is the role of the Department of Finance and Deregulation to keep a close eye on the expenditure of public moneys, and plainly the department of finance had concerns about the business plan so that firm was retained to review it. More specifically, this is the work that Greenhill Caliburn has been asked to do in schedule 1 of their contract: to report on and review the 30-year business case and 2010-11 corporate plan, examining the robustness of key assumptions. Pausing there, Madam Acting Deputy President, as I am sure you know, that word ‘robustness’ is one of the great euphemisms in documents of this kind. Whenever you see a question about the robustness of financial assumptions, what that tells you in layman’s language is: do these figures look just a little bit rubbery? Do the assumptions look a bit dodgy? That is what robustness means in a document like this.

So the assumptions, the robustness of which are being reviewed, include the financial assumptions—in particular, revenues, capital expenditure, operating expenses, assets, liabilities and cash flows—and the operational assumptions, which include NBN Co.’s rollout plan, including market and/or technological capacity constraints that might be relevant—for example, construction, equipment and contracting. You only have to identify the key assumptions, the robustness of which have now been called into question by the department of finance, to appreciate that the very core and being and economic foundation of this business case has been called into question by the department of finance.

As well, Greenhill Caliburn has been asked to review the assumptions on rates of return and capital structure, including NBN Co.’s ability to access private sector debt and quantum; to examine and provide advice on NBN Co.’s assessment of risks and relevant mitigation strategies in the business case and the 2010-11 corporate plan; to provide an analysis of relevant options for key performance indicators, including financial and non-financial targets and ongoing monitoring arrangements for key risks arising from the business case and the corporate plan; to identify any other commercial matters, issues and risks materially relevant to the business case and the Commonwealth’s shareholding in NBN Co.; and, to the extent possible, to appraise the findings of the NBN implementation study against NBN Co.’s key outputs.

What the finance department has mandated, quite properly, is an entire review of every key assumption of the NBN business case to see how robust it is, how dodgy it is, how rubbery the figures are and how tenuous the assumptions are. Yesterday, the shadow spokesman in the Senate on this area, Senator Birmingham, asked Minister Conroy whether the Greenhill Caliburn review would be published, would be made available to the public. After filibustering through the entire two minutes of his question, Senator Conroy at last came to the answer, ‘To complete my answer, Mr President,’ said he, ‘the answer is no.’

What an outrage it is that the parliament has concealed from it until after it rises a business plan. What an outrage that the pretext for concealment of the business plan from the parliament is the lie that it takes more than a fortnight to identify and redact commercially sensitive information in a 400-page document. But even more outrageous, even more incomprehensible is the fact that this minister has now told the Senate that the appraisal of the business plan—to put it in the vernacular, the document that tells us whether or not it stacks up—will not be released to the public.

Greenhill Caliburn are an independent adviser and are not a part of the government. The draft, by the way, was due yesterday and the final document is due by Friday. If the minister gets his way and Greenhill Caliburn come back with a report that says, ‘We have serious concerns about the accuracy of this assumption, the accuracy of this assessment of the rate of return and we have concerns about this particular scenario, which is one of the premises of the business case,’ the Australian people will never be told. The Australian people will never be told whether or not a business case, which has itself been concealed from the parliament, passes independent scrutiny by an independent corporate advisory firm. What a disgrace.

You wonder why Senator Stephen Conroy is a laughing stock in the industry. You wonder why the comment you most commonly hear among experienced people in this industry is that Senator Stephen Conroy has a cargo cult mentality about NBN Co. It is no wonder that his own colleagues have lost confidence in him and he is now increasingly a minister struggling and under pressure—the weakest link in the chain of a very weak government. It is no wonder that the Australian public themselves, $43 billion of whose wealth is in the hands of this incompetent, are concerned. They are increasingly concerned that, whether this is a good idea, whether it is a bad idea, whether the business case stacks up or whether it contains critical flaws, they will never be told because this government has decided to keep the truth from them.