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Monday, 21 March 2011
Page: 1201


Senator BIRMINGHAM (10:02 AM) —As the first speaker on a Monday morning in this place it would usually be a pleasure to rise and say, ‘It is a pleasure to speak on this legislation.’ Unfortunately, however, this is flawed legislation designed to pursue and implement a bad policy. It is not a pleasure to do so, because it is disappointing to once again be in this place debating a matter in which the government is attempting to spend billions upon billions of taxpayer dollars. By doing so, this government will plunge this nation further into debt and it will create a giant new taxpayer funded monopoly on the basis of its belief that this is the only way to provide faster broadband services for Australians when there are in fact many other ways.

I speak, of course, of the National Broadband Network and the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011. For the NBN, as it has become known, to be built it will require around $27 billion in equity funding from the Commonwealth government. The NBN Co. will need to borrow a further $10 billion to roll out the network. In addition, the NBN Co. is currently in a much-delayed negotiation with Telstra over a further deal for access to Telstra equipment and a transfer of infrastructure that is worth around $11 billion. All up, this is about a $50 billion venture that the government is involved in.

It is worth the chamber reflecting on that for just a moment—$50 billion. This will all be funded, one way or another, by debt through the $27 billion that the government will be borrowing—because it is already in debt and deficit—to pump equity into the NBN and it will be a debt that every Australian family and taxpayer will directly owe. The NBN Co. will raise $10 billion by borrowing from the equity market. It is not seeking equity investments and it is not seeking investors—it will simply borrow $10 billion from the financial markets. That will be debt that a 100 per cent government owned company will owe. The funds provided to Telstra will overwhelmingly need to be borrowed—whether it is $11 billion, $12 billion or $13 billion. We do not know the nature of that arrangement with Telstra, but what we do know is that that money will need to be borrowed by NBN Co. for it to be able to pay Telstra.

Basically, what we have here is a $50 billion debt package from this government to roll out fibre across the country in the fictitious belief that this is the only way it can get reasonable broadband services to all Australians. Let me state again, as I have stated in this chamber many times before, and as Mr Turnbull, Mr Abbott and others have stated, that the coalition believes that it should be a government priority to ensure that all Australians have access to fast, affordable and reliable broadband services.

The truth is that many Australians already do have those services. This government is going to spend billions of dollars duplicating services and infrastructure that are already there, and rolling it out to people and places that already enjoy faster broadband, rather than focusing its efforts in the areas of market failure and ensuring that it spends taxpayers’ money wisely in the places where fast broadband does not currently reach and probably will never reach on a commercial basis. That is where there is room for government investment—targeted, careful government investment focused on the people who might otherwise miss out. But no—this government sees the need to do the whole lot itself in this massive wasteful exercise. This is why it is a disappointment to speak on this legislation this morning because we will see tens of billions of dollars of debt unnecessarily borrowed and spent to build something that could be done in a properly regulated private infrastructure investment arrangement.

I will turn to these two bills that are before us today. The National Broadband Network Companies Bill 2010 governs the ownership, operations and legal status of the NBN Co.—the Commonwealth owned builder and operator of this broadband network. It limits NBN Co. to business activities directly related to supplying wholesale communications services—or, at least, that is what the government claims. I will shortly turn to some of those claims that highlight the flaws evident in this bill. It also sets out some of the conditions for the possible privatisation of this network. I will also turn to some of those issues shortly.

The Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011 amends the Competition and Consumer Act 2010 and the Telecommunications Act 1997. It requires NBN Co. to provide open and non-discriminatory access to retail carriers using its wholesale services and imposes access rules on NBN Co. and NBN-compatible technical requirements on non-NBN fibre rollouts. Once again, I will turn to some of those issues where the coalition has particular concerns with this legislation.

I say that it is flawed because the legislation does not deliver what the government promises—far from it. The government proclaims that this will be a wholesale only network, yet it leaves scope for mission creep in the NBN’s activities. It leaves scope for the NBN Co. to start to provide retail services in a number of different ways. The government claims that this will be set up in a manner to be privatised at a later stage and yet has agreed, in a deal with the Australian Greens, to put so many provisions and hurdles in the way of that privatisation that there really is a question as to whether it will be able to reasonably be privatised.

Let me go through some of the particular concerns that the coalition has with this package of legislation. Firstly, we are concerned that this bill will prevent appropriate parliamentary and public scrutiny and oversight of the NBN Co. This is the largest public works project in Australia’s history. As I said, it is a $50 billion project, with the overwhelming majority of that $50 billion being borrowed money. The government has already rejected calls for a decent cost-benefit analysis of this project either by Infrastructure Australia or by the Productivity Commission. The government chose to release only 160 pages of the 400-page NBN Co. business plan. The government asked MPs who were briefed to sign confidentiality agreements. The government has been incredibly secretive about the details surrounding this project and incredibly reluctant to submit it to any type of decent scrutiny or oversight.

Now we have this bill which seeks to have the NBN Co. defined as a corporate body rather than as a public authority, thereby exempting it from FOI laws. This is despite the fact that the NBN will be for the foreseeable future—for the length of time that probably any of us are likely to be in this place—a 100 per cent government owned entity. Unfortunately, the recommendation in the Senate committee’s report and the amendment proposed by the Australian Greens has the effect of making the NBN completely immune in practical terms from the Freedom of Information Act. The amendment proposed by the Australian Greens, which we understand the government has persuaded them to put up, has the effect of making exempt all documents of the NBN that can be described as being in relation to its commercial activities. Quite clearly, basically everything that the NBN does could be defined as being in relation to its commercial activities. The NBN is meant to be a commercial entity, so you would expect all of its operations to in some way, shape or form be commercial activities. That would therefore mean that everything could potentially be exempt under the definition from the Greens.

We believe that this parliament, the public and the fourth estate should have proper oversight of this NBN. We will seek to ensure that, just as schemes such as the Snowy Mountains scheme—which Senator Conroy so often likes to cite in relation to prior infrastructure projects—had decent parliamentary oversight, this one should as well. The Parliamentary Standing Committee on Public Works should be entitled to have oversight of the NBN and should not be prevented from having that oversight. We seek to ensure that freedom of information requests are reasonably dealt with in a manner that allows the public, the Fourth Estate and the parliament reasonable access to ensure that the operations and activities of NBN Co. are undertaken in a proper way in accordance with what the government claims will be the case. We also have concerns about how this legislation may hurt private retail service providers by allowing the NBN Co. to extend its mandate. This is the issue of mission creep that I spoke of earlier.

The government has repeatedly attempted to assure the parliament, the public, the media, telco carriers and the market generally that the NBN would provide only a wholesale layer 2 bitstream service to retail service providers and that it would not deal directly with end customers. But the restrictions placed on NBN Co. in these bills are unclear in some places and unduly expansive in others. For instance, NBN Co. will be able to supply network services directly to gas, water and electricity utilities, transport operators and road authorities even though the provision of such services to these entities is an existing and valuable business opportunity for Telstra, Optus and other Australian carriers. The bill does not specify in clear language that NBN Co. must limit its products to layer 2 service supply to retail service providers for the purpose of providing services to end users. The bill even makes it possible and easy for people beyond these utilities, should they manage to meet these relatively easy definitions of carriage service providers to directly purchase their services from NBN Co. as well.

We will challenge the government in the committee stage to live up to its promise that this is a wholesale-only network and to support amendments that will ensure: that this network can only provide services of a wholesale nature to retail service providers that can then be onsold to customers; that the NBN Co. should not have direct retail relationships with customers; and, further, that the NBN Co. should be limited, as the government has made clear, to the provision of layer 2 bitstream services. This is a very important technical point: to allow the NBN to move up the product chain and engage in that type of mission creep would be to allow the NBN to get into some of the most profitable areas of the retail market. The NBN, if it is to be a truly wholesale carrier, needs to operate purely and entirely at this layer 2 bitstream service in providing services; otherwise, it has the capacity to start to undercut the profitability of retail service providers.

Let me be quite blunt in relation to this space. We want to make sure that this NBN and this structure do not repeat any of the mistakes of the past. This parliament has already dealt with the structural separation issues around Telstra. That legislation was debated at the end of last year. If we go back over that debate, both sides of parliament should acknowledge that some of the issues around Telstra’s structure were mishandled in its transition from a government entity through its corporatisation to its ultimate privatisation. There were opportunities under governments of both persuasions to fix the problem, but that was not done. We do not want to see those mistakes repeated in this process. We will hold the government to what it claims will be the case: actually having a wholesale-only provider of the basic service and allowing the retail market to go and do what it does best, which is to provide competitive, innovative services and to be in charge of the development of new, innovative product. To do that, you need the NBN Co. providing a basic flat service to all of them.

We are also concerned that this bill will prevent competition in that space by preventing private competitors entering the market. The so-called level playing field, or cherry picker, provisions of these bills will mean that any company building a new network offering services of 25 megabits per second or higher will have to meet the same technical standards as NBN Co., make available the same basic layer 2 wholesale services as NBN Co. is meant to be making available and allow competitors non-discriminatory access to their networks at prices set by the ACCC. Mandating prices and reducing returns will of course prevent private investment in new networks that could otherwise lead to many Australians getting faster broadband much sooner than if they were to wait for the NBN. It will stifle innovation in the telecommunication sector by mandating which technologies must be used.

It is important to note in these concerns that it is not a case of saying that the NBN should not be rolled out in some places but is simply indicating that the coalition has concerns about preventing competitor companies from rolling out services in places. Canberra is a case in point. The Senate committee inquiry heard very compelling evidence from service providers in Canberra, who provide direct services already from the fibre services that are rolled out, that they will be threatened by this legislation. Their profitability will be threatened. They themselves will have to undertake major structural changes to be able to continue to operate if this legislation passes. We do not think it is reasonable to stifle private operators who in the past have provided decent services to the community and private operators who seek in the future to provide better competitive services to the community. Those operators should be entitled and enabled to get on with doing what they do best, and that is providing good, efficient and competitive services.

We are also concerned, as I flagged earlier, that this bill will make it harder to sell off the NBN. Initially, of course, this was going to be a 50 per cent private owned company. That was the government’s first approach. When they realised that no private operator was ever going to invest in it, it became a 100 per cent government owned company with the belief that it would be sold off once it was finished. However, subsequent backroom deals with the Australian Greens have seen significant barriers created for future privatisation. There is a real question as to whether the government even truly believe that it should become a private entity at any stage. We will pursue those concerns during the committee stage and seek to ensure that the limitations placed on future governments in dealing with this behemoth of an instrumentality are removed so future governments and future parliaments have the freedom and flexibility to do what needs to be done to fix this issue and to sell off parts of the NBN, if that is the best thing for the Australian public.

In closing, let me make it clear that the coalition believe this is a flawed policy and we have serious concerns about many aspects of these bills. I look forward to going through those concerns in detail in the committee stage. We will continue to vigorously argue that there is a better way than $50 billion taxpayer funded, debt funded investment in this sector to provide reasonable, fast, efficient, competitive broadband services to all Australians. Even though it is probably way too late, we once again urge the government to see common sense and to come onboard with a cheaper, more efficient and better way to do that.