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Thursday, 24 February 2011
Page: 1435

Mr TURNBULL (3:24 PM) —Over the last few days, the Prime Minister has regaled us with lessons in economics. She has talked enthusiastically about the law of supply and demand. She has talked about the virtues of competition and microeconomic reform. This reminds us of the way in which she described her approach to carefully analysing government policy. We all remember when she was pinged for having opposed any increase in the pension. She said: ‘Well, I look at it this way and that way. I hold it up to the light. I take it away from the light. I look at it from every angle.’ That was her defence. So there has been a commitment to a methodical analysis of projects and, apparently, a commitment to competition. Yet when it comes to the biggest infrastructure project in our nation’s history, the National Broadband Network—$50 billion of investment overall—there is no scrutiny, no accountability and no competition.

The hypocrisy of this government is extraordinary. This is the most extravagant and reckless undertaking of the most reckless and extravagant government we have known in our lifetimes. This is a government that came into office and said that there would be no infrastructure project undertaken without a rigorous cost-benefit analysis having been done first. A cost-benefit analysis says: ‘What are we trying to achieve? We assume that in this case it is to ensure that all Australians have access to fast broadband at an affordable price.’ That is fairly straightforward. Having defined the objective, the cost-benefit analysis would then ask and answer the question, ‘What is the most cost-effective way of achieving that objective?’ That is all that it would do. The need to do cost-benefit analyses is the reason that the government set up Infrastructure Australia, whose task it is to do exactly that. But, in the case of the NBN, there has been no investigation by Infrastructure Australia, no cost-benefit analysis and no attempt to seek to answer the question, ‘What is the most cost-effective way of delivering universal and affordable broadband?’

I come to the government’s apparent commitment to competition, private ownership and the power of the market. We have heard a lot over the last few days about the importance of both market forces and the government getting out of the way of private enterprise. We have had a denunciation from the Prime Minister—it must have hurt her to say it—of Soviet style command economics. Yet here, with the NBN, that is precisely what we have. This is going to be a massive, government owned telecommunications monopoly. In an era when for years both sides of politics have said that telecommunications needs more competition, we are going through the extraordinary process of establishing another government owned monopoly. As though we have learnt nothing about economics, instead of ensuring that there is going to be competition with this new government owned telecommunications company in order to keep prices down, the government is legislating and contracting to prevent competition.

The wastefulness of the public expenditure and the absurdity of the government policy on this are well illustrated by the position of the pay-TV cable network—the hybrid fibre coaxial network—which currently delivers Foxtel pay TV and is owned in large measure by Telstra and also by Optus. It passes about 30 per cent of Australian households. It currently delivers broadband and, to some customers, voice services. It is capable of delivering broadband at a speed of 100 megabits per second. It is using the DOCSIS 3.0 protocol in Melbourne and other cities where Optus’s cable is deployed. In other words, it is capable of delivering precisely the high-speed broadband service that the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, tells us will be available through the construction of this fibre-to-the-home NBN. But what are we going to do with the hybrid fibre coaxial network that passes 30 per cent of Australian homes? It is going to be overbuilt by the NBN at a cost of tens of billions of dollars and it will be prevented, by a contract with Telstra and shortly with Optus and by legislation, from competing with the NBN.

The only reason for that prohibition, stated by the NBN, stated by its advisers, Greenhill Caliburn or, indeed, McKinsey, is to protect the economics of the NBN. This is what it has come to after years and decades of microeconomic reform in which both sides of politics have played a constructive role. We take nothing away from the achievements in microeconomic reform of the Hawke and Keating era. We take nothing away from them on that. They made great reforms. But now we have this latest Labor government that, far from promoting competition, is actually seeking to stamp it out. It is not as though it is seeking to protect an existing government monopoly; it is actually spending $50 billion of taxpayers’ money to create one. This is a script, a political nightmare, that the most imaginative scriptwriter could not have conceived a few years ago. It flies in the face of all of the progress towards microeconomic reform in this country and it will inevitably result in higher prices for users of broadband services.

Let’s be quite clear about this. If the government has a massively overcapitalised telecommunications monopoly, the government will be under pressure to generate revenues for it. It does not matter whether that government is a Labor government or a coalition government. The department of finance and Treasury will be screaming at all of the red ink and screaming at all of the lost investment, and they will be looking for additional revenue. That is going to place inexorable pressure on that monopoly to increase its prices. The only thing that could keep that monopoly honest and keep prices low is real competition, and the government is doing everything it can to stamp out any fixed line competition.

In terms of preparedness to allow this massive investment to be scrutinised or accountable to the parliament, let’s look at what the government has done. Let’s look at what the Prime Minister has done. The Prime Minister talks about holding everything up to the light and looking at it this way and looking at it that way. There will be no cost-benefit analysis. There will be no scrutiny or oversight by Infrastructure Australia. We begged and begged and demanded that the business case be published, and finally we got a redacted version of it. A business case of 400 pages was produced, of which 240 pages were kept secret. For a century we have had a Public Works Committee of this parliament which oversees the public works—the infrastructure—investments of the Commonwealth. It has been doing that for a century. Only the other day, as a member of the Public Works Committee, we solemnly considered $50 million of investment in garages and training rooms for the Army and heard Defence officials describe the cost-benefit analysis they had undertaken. But here, where you have $50 billion, the Public Works Committee—if the government has its way; if the Independents in this House let it have its way—we will be precluded from examining that investment. The government has even gone so far as to seek to exempt the NBN from the operation of the freedom of information laws. Never has so much money been spent by a government with so little scrutiny.

The policy it is pursuing is absolutely contrary and flies in the face of all of the economic reforms of the last few decades. We are all committed—every one of us in this House, I believe—to all Australians having access to fast broadband at an affordable price. There is no question that most Australians do have access to fast broadband. There is also no question that many Australians do not, and there are a variety of reasons as to why they do not, which I will not delay the House with today. A responsible government faced with that challenge, that reality, would seek to ensure that those areas that do not have adequate broadband—whether they be in the bush or whether they be in parts of our big cities—are brought up to speed, literally as quickly as possible. There will be a variety of means of doing this. This is not a case of one size fits all. Australians do not care what technology delivers their broadband service. They want to be certain that it works. To paraphrase Deng Xiaoping—and if the foreign minister were here, he could give us the original: ‘It does not matter whether it is copper wire, glass fibre or wireless, as long as it delivers broadband, it works.’ That is the fundamental point the government is missing.

We are seeing right around the world the explosion of wireless broadband. This is a genuine telecommunications revolution. This year, 2011, will be the first year when more wireless enabled devices are sold—I am talking about smart phones, iPhones, iPpads and devices of that kind—than devices that are intended to be connected to the internet through a fixed line, such as desktop and laptop computers. That is an extraordinary watershed. We see Apple, the leading company in this field, generating three times the revenue from its wireless smart phones, tablet type devices, than it does from desktops and PCs. This is not to say that wireless is the complete solution, but, equally, it is naive to imagine that the explosion of wireless services is not going to have an enormous impact on the broadband experience and the broadband future of Australia.

I say to the House—as someone who has been involved in the technology business for many years—that there is nothing more perilous than trying to pick technological winners and putting all your bets on one, and there is nothing more perilous than for governments to do that. The appropriate approach for a government is to identify its policy objective—which is universal, affordable broadband—and then ensure that we have that delivered in the most cost-effective way possible. If that means wireless in many areas and many applications, terrific. If that means upgrading HFC cable, terrific. If that means fibre, that is good too. It does not matter what the channel of communication is; what people want is the outcome.

I conclude with this point: right at the heart of this we see the government referring to what it claims are the productivity benefits from having fibre to the home. The government has not been able to produce—including in responding to written questions—any evidence of productivity benefits from a fibre-to-the-home rollout. There are many benefits from broadband—no question—but there is no evidence that there is a productivity lift in households going from, say, ADSL2+ to 100 megabits per second. Indeed, nobody can identify any applications for residential use that would require such high speeds, other than—as the Prime Minister said recently—500 channels of streaming television. Whether or not her assessment of the technology is right, we have to ask ourselves whether it is an appropriate allocation of scarce resources—$50 billion—to ensure that every household can stream 500 channels of TV simultaneously into their homes. (Time expired)