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Tuesday, 5 July 2011
Page: 7634


Mr NEVILLE (HinklerThe Nationals Deputy Whip) (18:20): Let's take a step back to 2007, when Labor promised it could deliver fibre to the node for $4.7 billion. That is a long way from its revised fibre-to-the-premises proposal of $43 billion—one of the most expensive solutions in the world, especially as the government has promised this solution will go to 93 per cent of the Australian population, notwithstanding the fact that South Korea, one of the most technologically advanced communications providers, sees fibre to the node followed by copper as an acceptable model for massive multi-unit accommodation high rises. It also uses a variety of other solutions to cover the country with high-speed broadband, includ­ing HFC, which we are going to sideline by the purchase of an $800 million payment to Optus. In other words, the old pay TV cabling will not be able to be part of the solution. We will effectively buy Optus's customers under this bill. We will give them to NBN Co., and it will then buy the services back from Telstra or Optus, presumably—a funny, roundabout way to do things, is it not?

Now we find that the NBN solution, on the government's own figures, will cost about $36 billion, not allowing for recent changes and the buyout of Telstra and Optus. Then we need to take into account that with the rollout in Tasmania—and we have been to Tasmania to see this—costs have blown out to as much as $7,500 per connection. Worse still, 14 leading Australian based companies were accused by NBN Co. of gouging when their responses to tenders indicated that the mainland rollout was likely to be massively—note the word 'massively'—over budget. It is understood, though not admitted by NBN Co., that the project is already behind in time, so there is every possibility that the eight-year rollout target or the oft stated 2020 completion date will not be met.

That is the background against which we move to the next phase of the NBN saga: the deployment to greenfield sites. So we hardly start from a position of confidence, high performance or rigour on the part of the government when we consider this bill. Let me interpose by saying that there is a twofold crisis developing in the housing market: first, the burgeoning cost of the family home, and second, availability. Both these factors are impacted by the cost and efficiency of connecting services to greenfield estates. Later I will show how we might improve this situation in the field of communications.

The House will be aware that a compre­hensive Joint Committee on the National Broadband Network has been formed. The committee has been asked to report on the bill before us. In fact, it tabled its report yesterday. Coalition members delivered a dissenting report. Central to this dissenting report are two suggested amendments focused on the efficient, timely and cost-effective rollout of fibre connections to greenfield sites. It is also planned that the abilities of small and proven greenfield operators will be utilised.

The first amendment allows for a developer, having provided the pits and pipes, to choose to have a private fibre installer connect his estate, provided that the installer meets the stipulated industry standards—not necessarily NBN standards but the industry standards. We make that proviso in line with earlier reforms whereby it was necessary not to have Telstra judging Telstra. It would then be required that the developer be reimbursed by NBN Co. This cost, in turn, would be set by the minister, based on a per-residence tariff set against market experience, special costs of construction and any special costs to NBN Co.

What will this do? For a start, it will not act against the objectives of the NBN. Best of all, it will ensure the expeditious conn­ection of estates without developers having to wait for NBN Co. and its preferred contractor, Fujitsu. It will ensure that NBN Co, wittingly or unwittingly or through the pressure of backlog, will not hold up services to estates going on the market. That is very important. It is very important that a full range of services are provided. The whole thing falls down if the fibre is not connected at the time all the other services are in place.

The second amendment will allow private-sector greenfield cable operators to operate a network they have installed as a small boutique network. By exempting these operators from cherry-picking provisions, a range of options would be open to developers. It would work on the basis that the greenfield operator would build, own and operate the network until such time as it was sold to NBN Co. Given the huge eight- to 10-year task ahead of NBN Co., it is highly unlikely that the company would be tempted to overbuild such a small network.

Returning to the theme of housing and development costs and taking my own area as an example, developers in Bundaberg and Hervey Bay struggle with the imposts of state government and council costs. Council, I might add, has been put under extra pressure by the withdrawal of local government subsidies and the interference of government departments with unrealistic expectations. An expression of this was the withdrawal of the 40 per cent subsidy for water and sewerage—a cost that is now reflected in increased rates and costs of developed land. In other states it is even worse. It is said that a $500,000 home in New South Wales has $150,000 of government charges of one sort or another embedded in it. With this as a backdrop, every effort should be made to ameliorate the costs that go to make up a fully serviced block of land—the share of head works, curbing, channelling, roadworks, water, sewerage, gas, electricity park charges and so on but, most importantly, comm­unications.

Let me say at this juncture that the coalition shares the concern for a modern, timely, cost-reflective high-speed broadband service. We have never argued against that. In fact, the OPEL scheme proposed by us in 2007, had it been adopted, would have covered 93 per cent of Australia with ADSL 2+ and wireless broadband. It would have been rolled out by now, right across Australia. That means that now, not in eight to 10 years time, and at a fraction of the cost, Australians would have had up to 10 or 12 megabits of broadband coverage.

If a plan developed by Senator Nash, Senator Joyce, me and the Page institute had been adopted, a more elaborate scheme with a strong country and regional focus, costing around $6 billion, could have been consid­ered. So even if you took the two of those together—Opel, which was $1 billion from the government and $1 billion from the company and, say, $6 or $7 billion from the National Party proposal—you would be looking at about $8 or $9 billion. That is a far cry from $36 billion, and we now predict the figure could blow out to as much as $50 billion.

Having said all this, we accept that if you are rolling out fibre to 93 per cent of the country it makes sense to commit to fibre to the premises on new estates where you might not otherwise do so—if, for example, you followed the South Korean option. Though it might be a little dearer than other options, the incremental cost of fibre to the premises is worth while, especially if it is efficiently installed at the same time that water, gas and electrical services are being connected. What bewilders me somewhat is why the government has stepped aside from its long-promulgated competition model, as outlined by Minister Conroy as late as 9 December last year:

It has been a consistent feature of the Government’s policy in new developments that there should be room for competing providers. This continues to be the case. … Providers can compete to provide infrastructure in new developments, for example, by offering more tailored solutions to developers or more expeditious delivery.

The government now say, however, that, yes, you can use any installer, but at the developer's cost. If the developer wants NBN Co. to do the work, and ultimately its downstream subcontractor Fujitsu, there will be no cost. So you can see what is going to happen. Obviously people will run to NBN Co. and this will create a monopoly, as most developers are not going to pay for a service that is available free of charge, albeit that they might have to wait some time to get it. In extreme cases this waiting time could jeopardise the ready availability of land for sale and development. In a worst-case scenario, with NBN Co. exercising a cost advantaged monopoly, one could envisage a huge bottleneck, with home sites being held up for months on end to the detriment of developers, builders and homeowners alike. So we welcome the deployment of broadband fibre to new developments but we deplore the removal of effective competition from the scenario. It is somewhat akin to a return to the bureaucratic days of Telecom and the PMG, where you had to wait an eternity to have services connected. Hardly the hallmark of a progressive government!

The Joint Committee on the National Broadband Network heard evidence from Greenfield Fibre Operators of Australia. It has in its membership seven fibre installers: OPENetworks, Service Elements, TransACT, Comverge, Broadcast Engin­eering and Pivit. GFOA companies have been in competition with each other as well as Telstra Velocity, OptiComm, VicUrban, Broadband Multinet and still others for more than 10 years. They are not Johnny-come-latelys to the field. They are experts in high-speed internet, data, voice, free-to-air TV, pay TV, CCTV security, power, water, traffic and other utility management services. They connect or pass 400,000 homes and businesses and have another 350,000 premises to connect in greenfield estates already committed to their networks or under other deployment contracts. With a resource like that that could create competition and that has the runs on the board, why would you so alter the NBN modus operandi to exclude them from the scenario? What possible good sense does that make?

Having said that, the coalition have concerns about the cost of the scheme and about competition. We accept that we need high-speed broadband, but we call on the government, through these two amendments, to bring other operators into the field to create a spirit of competition and, without damaging the NBN scenario, to make the system much more efficient.