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Wednesday, 29 February 2012
Page: 1165

Senator FISHER (South Australia) (10:38): Following on from my colleague Senator Birmingham, can I say the coalition of course supports the implementation and continuation of the universal service obligation. The coalition reluctantly recognises the need to rejig that obligation, given that this government seems so bloody-minded as to continue to implement its National Broadband Network. In that context the coalition accepts the need to deal with this legislation.

The problem we have with it is that we simply do not trust the government to deliver, given that it is insisting on creating a new bureaucracy to deal with the universal service obligation and given that there is, arguably, already in place—in ACMA—a body that could be given the task of doing it, particularly given that the new body will not have any incentive to constrain its own costs. It will be funded to the tune of a flat $100 million, with any costs over and above that to be raised by an industry levy. That is, it will be paid for by participants in the industry. Ultimately, those costs will be passed on to consumers. And whilst TUSMA, the new agency, will be constrained by its policy objectives, the Telecommunications Universal Service Management Agency Bill 2011 gives the minister the discretion to expand the tasks TUSMA has—for example, on a public interest basis.

The Australian Communications Consumer Action Network has already recommended that the objectives of TUSMA be expanded—for example, to provide for people with a disability. That may well be a very good cause, and one can imagine the pressure to be put on the good minister—the minister for technology and gadgets—to expand the objectives of TUSMA to cover that. That is but one example of the sorts of ways in which the role of TUSMA may be expanded, with consequent and significant cost implications.

So why don't we trust the government to deliver? When the government first announced a version of its National Broad­band Network dream it was, as Senator Birmingham correctly said, a $4.7 billion promise for fibre to the node. When the tender fell in a heap, that promise was aborted and replaced by the promise that this government is now struggling to implement: the promise of a $43 billion fibre-to-the-home network. But the rollout of the NBN has been plagued by delays, secrecy, overspending and lack of transparency. Just a fortnight ago at estimates we were told that NBN Co. is falling well short of the fibre targets that NBN Co. projected—

Senator Conroy: No, you weren't—don't tell fibs!

Senator FISHER: in 2010, Minister, you know it well, for 2012. The minister attempted to downplay those projections on the basis that they were based on assumptions that have not been realised. It may well be—

Senator Conroy: 'It may'; don't let the facts get in the way.

Senator FISHER: It may well be that the delay in reaching a deal with Telstra has impacted on those targets. It may well be that the delivery of fibre to greenfields sites was passed from NBN Co. back to Telstra. So it may well be that critical assumptions upon which NBN Co.'s 2010 projection was based—

Senator Conroy: Have changed.

Senator FISHER: It may be that those assumptions have changed. But the fact remains, Minister, that NBN Co. has still not met the targets projected in its 2010 corporate plan.

Senator Conroy: It couldn't.

Senator FISHER: Minister, it matters little that it couldn't; it projected that it would, if these assumptions came to bear. It was the government's task to ensure that these assumptions did come to bear so that you could deliver on your overall promise for the NBN. But not only did NBN Co. fail to deliver on its projection, it has spectacularly failed to deliver—or should I say demonstrably failed, because 'spectacu­larly' is meant to be a good word, and it is not good that they have failed to deliver.

The NBN Co. corporate plan, published in 2010, promised that fibre would pass by some 260,000 premises by June of this year. Yet, to date, just under 19,000 premises have been passed with fibre. And passing them with fibre is just the first step, because then they have to bother with getting connected. Some 19,000 of some 260,000 is only seven per cent of the target. That is a compelling 93 per cent shortfall from target, or some 240,000 premises, that NBN Co. has to address in the next four months—which it will not do, of course—in order to realise the target that it set two years ago. Because the assumptions failed to be met, NBN Co. did not pass fibre by one house in the last six months of last year. The ACCC's approval of the technical criteria in recent days will now free up the rollout of the NBN. We look forward to that changing. But we have little confidence that NBN Co.—or this government—will be able to deliver many of the targets that it puts before the Australian people.

The government is continuing to make it difficult for not only the opposition and other parliamentary parties but the Australian people themselves to work out whether or not the taxpayer is getting value for money with the rollout of the NBN. In answer to a specific question during the committee inquiry about the TUSMA model for the delivery of the USO and the negotiations with Telstra about the Telstra agreement, particularly as to whether future payments from TUSMA, the new agency, to Telstra under the Telstra agreement were a financial gain to Telstra, the department said:

This is a vexed question that you have obviously had quite a few people raise with you, as they have with us over the full course of these negotiations.

Of course, coalition senators, as part of what Senator Cameron said was 'my inquiry', considered at one point—as the minority on the committee inquiry chaired by Senator Cameron—that the negotiations were deficient. But leaving that aside for the moment, the department said:

This is a vexed question … We think that we did a good job in negotiating a price with Telstra. … As to the actual cost of delivering them—

the services—

all I can say is that the negotiations with Telstra were very difficult. Whether there is a margin in there for Telstra I simply do not know. Telstra would not tell us and they did not tell you. Nobody else knows, so I cannot answer your question definitively. All I can say is that we did our best to negotiate a minimum price and we had some independent reassurance.

The total lack of transparency in developing the TUSMA model and negotiating the agreement with Telstra to contract to deliver the USO is a fundamental concern given this government's track record on the rollout of the rest of the NBN, but it is hardly a surprise. I said earlier that Telstra has no incentive to constrain costs. From 2014 to 2015 the government's contribution—so read for that from the taxpayers—will be a flat $100 million and any blowout in TUSMA's costs will be recoverable through an industry levy with those costs ultimately to be passed on to consumers.

I also said earlier that we struggle to understand the necessity to create a new bureaucracy. As my good colleague Senator Birmingham said, this government has never met a bureaucracy that it did not love. Not only do we struggle to understand that, and I do not think that is to do with our IQ; it is particularly hard to understand that given that the government has largely removed the need for the new agency, TUSMA, to make decisions about contracts to deliver the USO for the next 20 years because that is done and dusted with this bill. It is only after the next 20 years that it is opened up to competition for others to deliver.

In the time that is remaining I want to raise some of the evidence that was given to the committee. For example, there is that from Macquarie Telecom, which said it was concerned about many aspects of the bills before the committee which included the limited capacity for industry participation in negotiations or consultation, the flawed basis upon which the universal service obligation was now based and the scope of universal service, which is an issue that I addressed earlier. The Optus evidence was interesting. Optus said that the universal service obligation bills were a missed opportunity because, in Optus's view, significant structural changes were having to happen because of the deployment of the NBN so the traditional USO network was no longer required—correct. Optus was saying that the most efficient and effective response would have been to either remove or significantly scale back that framework, hence a missed opportunity. They also talked about the increase in the cost of delivery of the USO from $160.5 million per year to $340 million per year without any additional consumer benefit and said, more so, that proposed changes to costing and funding were not, in Optus's view, competitively neutral given that Telstra's supply costs would be unchanged whilst the payments it got, which were funded by its competitors through the levy and passed on to consumers, would be significantly increased under the new arrangements. Optus also reinforced the concerns that TUSMA simply added a new level of bureaucracy and cost to the delivery of the USO which may lead to consequent cost increases and there being a barrier to long-term reform, given the fact that the minister had the ultimate discretion to expand the statutory functions that TUSMA was to perform.

Telstra was at pains to say that it supported the USO bills in the context of facilitating the implementation of the agreement and as part of Telstra's broader participation in the rollout of the NBN. But it did observe that the bills in their entirety would, in Telstra's view, increase adminis­trative costs and it said it had some concerns within its own house with respect to delegations and discretions, particularly those in the lap of the minister. Other comments from other witnesses, such as ACCAN and the Telecommunications Industry Ombudsman, have been raised by colleagues, in particular Senator Ludlam.

So it is given these contexts that the coalition continue to be concerned. Whilst we totally support the universal service obligation and the need to recharacterise it as the government continues to attempt to deliver on its National Broadband Network promises, we have little confidence that the government will do so in an effective and efficient way. That having been said, we reluctantly support this legislation.