ANDREW REIMER: You heard just a moment ago, on the News Hour, that construction work is about to begin on the infrastructure for the next stage of the rollout of the high speed National Broadband Network. The company undertaking the work for the Federal Government, NBN Co, released a 12-month plan today listing the 28 new locations in each state and territory where construction of the fibre optic network will start between now and September of 2012. Just a moment ago you heard Prime Minister Julia Gillard say the NBN would provide benefits for regions such as the Illawarra over in New South Wales which has been hit hard by job losses at BlueScope steelworks. She talks about the fact it will bring new productivity to businesses, also enable the creation of new businesses, businesses that need the connectivity that this National Broadband Network will bring, which is obviously good news for New South Wales but, according to Liberal Senator Simon Birmingham, the future not so rosy for us here in South Australia when it comes to the NBN. Simon Birmingham, thanks for coming on the program tonight.
SIMON BIRMINGHAM: A pleasure, Andrew. Good evening to you and your listeners.
ANDREW REIMER: Senator, you’re saying that South Australia is going to be left behind all the other states when the rollout begins?
SIMON BIRMINGHAM: Well, Andrew, this NBN is a most inefficient and costly way to deliver faster broadband services right across Australia, but it seems in South Australia it’s proving to be even more inefficient and even more costly and therefore we’re facing even greater time delays in getting access to decent broadband services and it’s just a disappointment, I know, for many people who have had a lot of hype surrounding this NBN they’ve heard. They’ve heard, of course, a lot of stories from Labor about how wonderful it’s going to be for them but in reality it’s taking a long time to roll out. It’s already beset by delays and it will ultimately be beset with multi-billion dollar cost blowouts.
ANDREW REIMER: So why’s… and we’re talking about the fact that it’s moving forward already in the other states and territories but here in South Australia, what’s the hold up here? Why is it proving so difficult here?
SIMON BIRMINGHAM: Well, Andrew, we have a situation where work is currently underway allegedly on building the NBN in every single [other] state and territory of Australia – including the ACT and Northern Territory, Tasmania – but it’s not happening in South Australia and you’ve got to wonder why that problem is the case. As we understand it, contract negotiations broke down over the last couple of months in SA between the wholly Government owned NBN company and ETSA [Utilities] who were meant to be building the service in SA. One can only assume those negotiations broke down because ETSA couldn’t build it within NBN Co’s taxpayer funded budget and so what we’re going to see there is obviously either a lesser service provided in the long run or quite possibly significant cost blowouts because it’s not able to be delivered against the budget the Gillard Labor Government has provided it with.
ANDREW REIMER: Now, you talk about an assumption that that’s the reason why negotiations broke down. Have you spoken to the Government about this?
SIMON BIRMINGHAM: Well, in fact I’ll be asking the Government about it in Senate Estimates hearings later tonight, so we’ll pursuing just why SA is the only state or territory where there is no contract for the delivery of these services let at present. There were delays in other states. They had to reissue and restart contract negotiations elsewhere, so we believe there’ve been a range of cost blowouts already to this and certainly they’ve admitted that it is behind schedule right across the nation but obviously it’s even further behind schedule in SA and presumably even further cost blowouts in SA.
ANDREW REIMER: Now, as far as South Australia’s concerned, how many premises have been approached by the Government – or, if any have been approached by the Government at this stage – as part of the trial?
SIMON BIRMINGHAM: Well, we’ve seen more than $800 million spent around the country on the NBN to date – a vast sum of money and of course yet more waste just alongside proposals like the carbon tax and so on, but in SA some 1100 homes have been passed. That’s 1100 homes in SA out of more than $800 million in expenditure, and out of those just a handful to date actually are utilising the NBN service so, in terms of waste and value for money questions, right now this is looking like a very expensive way of providing faster broadband for people. People are obviously going to question the price of this, what it’s going to mean ultimately for their home phone connection and so on as well, and there are many, many hurdles to come for this NBN which has all the hallmarks of being a ‘Pink Batts’ scheme or a home insulation scheme of even greater scale in terms of the cost and debacle as we go to the rollout stages.
ANDREW REIMER: So we’re talking about another ‘Pink Batts’, school halls fiasco as far as the Government’s concerned?
SIMON BIRMINGHAM: Well, this Labor Government has track record. Scheme after scheme it ends up failing on. We see waste and mismanagement time and time again, whether it was with school halls, whether it was with ‘Pink Batts’ and the home insulation scheme, whether it is, of course, with the gross waste of taxpayer money for advertising around the carbon tax or, of course, in this instance, the $50 billion NBN – that’s five-zero billion with a ‘B’ for the NBN. It’s a huge project that they’re budgeting already and here we are having only just started the project. They’ve already spent $800 million, they’ve barely scratched the surface of reaching households and they’re already suffering cost delays and cost blowouts.
ANDREW REIMER: Senator, just go back one step. The cost you said just a moment ago – my understanding was the NBN project was going to be $36 billion and due to be completed in 2021.
SIMON BIRMINGHAM: $36 billion is the alleged cost of build and the build alone. On top of that there is the deal with Telstra and the deal with Optus where NBN Co and the Government are basically buying Optus and Telstra out of their existing broadband infrastructure. Those deals – with Optus it’s about $1 billion worth, with Telstra it’s about $13 billion worth – so you actually get up to this $50 billion figure between building the new infrastructure and paying, and this is the madness of the NBN proposal – you are paying Telstra and Optus to stop using perfectly good cable services that go up and down every street of Australia – well, not every street but many streets of Australia – already, so you have this perverse outcome where, for the Government to establish its own new taxpayer funded monopoly, they are actually spending billions of dollars of taxpayer money to buy out private competition and to buy out Telstra and Optus from what they already do.
ANDREW REIMER: So we’re going to pick up the tab at the end of the day?
SIMON BIRMINGHAM: Telstra shareholders overwhelmingly voted today to receive $13 billion in taxpayer money to retire some of their infrastructure and, if you were them, why wouldn’t you?
ANDREW REIMER: Yeah, that’s fair enough, too, but for the rest of us, as well as increased charges that we’re being forewarned about already…
SIMON BIRMINGHAM: Look, when nearly 100 per cent of Telstra shareholders voted yes to this deal, it was obviously a very good deal for Telstra shareholders but it’s taxpayers who are paying it and you’ve got to wonder whether it was a good deal for taxpayers but, at the end, what everybody wants is fast and affordable broadband for Australians. The problem with this is that it is trying to gold plate the service to each and every home across the country. In doing so it’s going to knock out the affordability. It will be a very expensive service both to build and an expensive service for people to access in the long run and that means that ultimately many households will be worse off in terms of their internet access than they currently are.
ANDREW REIMER: You talk about the word ‘affordability’. Can this country afford the NBN at this point in time, considering our financial status, well, in relation to what’s happening with the carbon tax and other issues around the country?
SIMON BIRMINGHAM: Well, this project is built on debt and of course it is debt layered upon debt when it comes to this Government. You have huge deficits that have been mounting up year on year. The Gillard, and before that the Rudd, Labor Government have never delivered – never delivered – a budget surplus. Every year they’ve gone into deficit, by vast amounts we’ve seen last year and this year, and this will be funded ultimately by further borrowing – some it borrowings directly against the budget, some it borrowings of the NBN Co, which in the end is 100 per cent taxpayer owned, going into the market and raising its own debt. Whichever way you look at it, though, we’re seeing far more debt piled up for Australians that we’ll all have to pay for in the long run as a result of this project and, frankly, no, Andrew, at present Australia, with the debt we have, can’t afford to be spending, on a whim, $50 billion for this National Broadband Network that never had a cost-benefit analysis against it, that has never been compared against far cheaper alternatives to ensure that those who don’t have access to fast enough broadband get it but that we don’t go and buy out a functioning and competitive market in a place where it’s already working.
ANDREW REIMER: Senator, good luck with the Senate’s Estimates committee tonight.
SIMON BIRMINGHAM: Thank you, Andrew, yes, we’ll be back on with NBN Co tonight and hope to traverse a whole range of things including the $25 million or so spent on carbon tax advertising to date, which I’m sure many of your listeners would have been concerned about.
ANDREW REIMER: Senator Simon Birmingham, thanks very much.