Senator Birmingham: (South Australia) (12:44 PM) -It is my pleasure to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. It is a nicely named bill whose title makes it sound fairly innocuous, but it is a bill that strikes at the very heart of shareholder risk, sovereign risk and issues to do with the long-term structure of not just Australia’s communications market but, importantly, the wealth and holdings of many thousands of Australian families.
I have had the pleasure of serving on the Senate Environment, Communications and the Arts Legislation Committee with you, Madam Acting Deputy President Troeth, which inquired into this bill and every step of this government’s National Broadband Network-all phases of this government’s National Broadband Network; indeed, of course, all the different variations of this government’s National Broadband Network. It is quite apparent to anybody who cares to give this even the most cursory of glances that this is a government that is hell bent on pursuing some type of policy under the name of the National Broadband Network, whatever the cost. We have seen from this government already the tragic consequences of its headlong pursuit of a policy where there has been no consideration of the implications of pursuing that policy.
With much fanfare, back when the Prime Minister was the Leader of the Opposition and Senator Conroy was the shadow minister for communications, the government announced the establishment of a national broadband network as a key part of its election platform. They waved it around to the Australian people and said: ‘This is a fabulous new plan. This is a plan that will fix Australia’s broadband problems and deliver for all Australians.’ The plan was based on a fibre-to-the-node broadband network. The system was based on the premise that upgrading parts of the network would deliver faster speeds and benefits across the network.
When the government were elected they started attempting to implement their fibre-to-the-node network policy. In doing so they spent millions of dollars and failed to meet every deadline they set themselves. Consultants were the major beneficiaries of this. As always when this government seems to spend its money, the winner was the consultants, who reaped millions and millions of dollars from the study of how the national fibre-to-the-node broadband network would be implemented.
What happened? After spending millions of dollars and after investing significantly in the development of that network, they discovered-they claimed-that none of the bids they received could deliver it. Had they listened along the way to the many concerns from people who suggested that the structure and approach the government were pursuing were inadequate and inappropriate, and had they listened to the concerns of the opposition along the way about the issues surrounding their National Broadband Network stage 1 proposal, they would not have ended up wasting millions of taxpayers’ dollars. But, no, they went down that path. As we have seen time and time again with home insulation, green loans and other portfolio areas where this government has pursued an agenda without listening to the warnings and without heeding any of the commentary around it, it resulted in Australian taxpayers being worse off.
So we got to the end of the National Broadband Network stage 1 with the government having spent millions of dollars and not finding a successful tenderer or proponent to deliver on its fibre-to-the-node network. The Prime Minister and the Minister for Broadband, Communications and the Digital Economy, on a few airline flights that crisscrossed the country, decided that the government’s $4-odd billion fibre-to-the-node network was not good enough and could not be delivered, so in a panic they upped the stakes. Boy did they up the stakes-it went from a $4-odd billion network to a $43 billion network. That is upping the stakes all right. That was the Prime Minister saying: ‘We’ll put it all in. We’ll put it all on red.’ This government has a continuous capacity to put it all on red-and to drive us into the red, in fact, in terms of the debt and spending of this government.
So they came up with a new national broadband network. The stage 1 fibre-to-the-node network was placed in the bin and totally forgotten about-never mind the millions of dollars wasted along the way. We now had National Broadband Network stage 2. Some 18 months into the government-never mind that no cable has been laid, no fibre has been laid and no new services have been delivered and there is nothing for Australia’s communication users; do not worry about any of that-we have a new model and a new plan that is even better. We are told it is even better because the government are going to spend some $43 billion on building it.
They believe they are going to miraculously get private sector investors. They believe that somehow they are going to keep the government shareholding in this to $51 billion. They believe that somehow Australian mums and dads are going to part with their hard-earned money to buy Aussie Infrastructure Bonds in this miraculous new National Broadband Network.
We have seen with this new process in place the government again failing to meet all their own deadlines. They are dragging their heels. They are desperately hoping they can hold together this farce of a policy until after the next election, because they know that this policy will not be attractive to investors, they know it will not be attractive to Australian mums and dads who might wish to put their hard-earned money somewhere and they know they are not going to come up with the billions of dollars they need in Aussie Infrastructure Bonds or from investors to cobble together this new fibre-to-the-home broadband network.
Not only were they upping the stakes in the dollars spent but, instead of just taking fibre to the node to a point that would hopefully increase services, they decided to go the whole hog and take it all the way to the home. They did this without any cost-benefit analysis or any study as to how it might be achieved. It was the Prime Minister and Senator Conroy sitting on the Prime Minister’s jet crisscrossing the country saying in panic: ‘We can’t deliver on our first promise, so we’d now better find a new way to deliver a better promise. We’d better find something that is big enough and bold enough that it might capture the public imagination and fool people long enough to get us through the next election.’ That is what this, of course, has been all about.
The government, in introducing this legislation, has attempted to claim somehow that it is not core to the National Broadband Network and not central to the development of the NBN. Yet even strong supporters of this legislation, such as David Forman from the Competitive Carriers Coalition, told the Senate inquiry into this bill:
If you suggested to me that the NBN was likely to succeed in the absence of this legislation I would suggest that that is a pretty big bet.
It is a very big bet; it is all on red already. The government has pushed its $40-odd billion dollars in there. It is all on red and it would be a very big bet to think that this bill is not central to the government’s NBN objectives. It is central to it because of what this bill does to Telstra. The government is using this bill to try to blackmail Telstra into structurally separating, to try to force Telstra’s hand and, in doing so, it is going to jeopardise the shareholder value for hundreds of thousands of Australian families and jeopardise Australia’s reputation as a centre, a nation, where investments are sound, where governments do not go and pull the rug out from underneath investors on an ad hoc basis.
The coalition has argued consistently from day one that this and all other NBN legislation should wait until we see the implementation study. It is not an unreasonable proposition, seeing that we know there was no cost-benefit analysis and no study done into whether fibre-to-the-home broadband could actually be delivered. There was nothing of consequence done by this government before announcing its back-of-the-envelope plan after a couple of plane rides by the Prime Minister and Senator Conroy. We have said, quite reasonably, that the government should release the implementation study into its NBN before we as a Senate and as a parliament go tearing up Australia’s communications framework, rewriting all of the legislation, trampling all over the rights of mum-and-dad shareholders and of a major Australian company, Telstra, risking Australia’s sovereign risk and putting in jeopardy the perceptions of investors right around the world. We have said, ‘Let us see the implementation study.’ Why have we said that? Every time we have questioned the government on its NBN, every time any of us have questioned Senator Conroy or anybody else, their response has been, ‘We have to wait for the implementation study,’ or, ‘That will be in the implementation study.’
Let us just have a look at the implementation study and what the government has said about it. During budget estimates last year Senator Conroy told the committee:
The government will shortly commence its implementation study, which will, among other things, work through the detailed network design and rollout schedule for the NBN. It will also investigate the extent of coverage that will be achieved by [fibre-to-the-premise], next-generation wireless broadband and satellite elements. That implementation study is due for completion in early 2010.
That was a generic statement, a fairly all-encompassing one, mind you, as to what might be in the implementation study.
Let us look at some of the key areas related to how you develop a national broadband network. Let us start with pricing, which is fairly fundamental: what will consumers pay and what will retail providers of broadband services pay? On 14 May 2009 Senator Conroy said:
Pricing levels on the National Broadband Network will be a key issue considered in the implementation study …
When asked on 26 May 2009 by Senator Minchin:
Can you guarantee that the wholesale fixed line prices will be no higher than they currently are?
-could Senator Conroy guarantee that wholesalers and retailers who take up this service would not be paying any more in wholesale prices-Senator Conroy replied:
That is why we are having an implementation study.
In relation to the costs of this proposal, Senator Minchin asked:
Are you able to give the committee at least some breakdown of that $43 billion in terms of wages, equipment, capital and expenditure?
Senator Conroy on 26 May 2009 replied:
The implementation study is examining most of those issues.
In response to a question on notice asked by Senator Abetz on 17 August last year:
What is the total Federal Government contribution to its cost …
Senator Conroy responded:
To be determined as part of the Government’s consideration of the Implementation Study.
Asked about what other funding sources might be involved in the project cost, Senator Conroy answered:
Strategies to maximise private sector investment will be investigated as a part of the Implementation Study …
When asked about the timing of the rollout and completion phases and when we might expect to see some progress, he replied:
The phasing and associated costs for the full rollout will be developed as part of the Implementation Study.
When asked about cost-benefit or other modelling that might have been done before the project was approved, Senator Conroy responded:
The Government has commenced the process to undertake a detailed Implementation Study that will include business case modelling.
When asked about rural and regional Australia and in particular the Glasson report, Senator Conroy has provided little information.
The Glasson report, started under the previous government, detailed a whole range of improvements that were necessary to services in rural and regional Australia, and the coalition funded the National Communications Fund to address those improvements. This government has raided that fund to pour into its $43 billion National Broadband Network. This government has taken the $2 billion of capital that was left to ensure rural and regional Australians were never left behind and it is of course going to pour those funds into this great monolith called the NBN. When asked about the processes for delivery of the Glasson report requirements around broadband services, what was response from Senator Conroy? He said:
We will see what the implementation study provides to us and then we might be in a better position to make an assessment along the lines that you are calling for.
How might this rollout occur? In relation to the cabling issues, will we see fibre strung up and down every street in Australia? Will it all be overhead wiring? How will it be rolled out? Senator Conroy on 16 June said:
… we have said we are having an Implementation Study to go through all these issues.
I am sorry if this is repetitive, Madam Acting Deputy President Troeth, to you or the chamber or the people in the gallery, but it goes to the heart of the fact that, on every detail this government has been asked about when it comes to this National Broadband Network, Senator Conroy has responded time and time again by citing the implementation study as the vehicle that will provide the detailed answers.
In relation to ownership levels, the government has indicated a minimum shareholding of 51 per cent. ‘Has the government indicated a maximum shareholding in this company?’ Senator Minchin asked on 26 May last year, indicating further that at that time, as is still the case today in 2010, the government owned all the shares. The response from officials at Senate estimates was:
… issues relating to the structure of the company will be finally determined after the implementation study.
When asked about equity, where the money will come from, the timing of the program from which the money will come and how much the taxpayer has to put in first before we get any of the private sector money that is allegedly coming to this, the response was:
It is an issue that will also be dealt with as part of the implementation study as the appropriate mechanisms to utilise.
It is transparently clear that this government has charged ahead on this issue, trying to ram legislation through this parliament without having considered, without having publicly released and without having informed the parliament or the senators within it of the details of this implementation study. We knew it was due to the government in February. We understand that the minister has received it.
Senator Cormann -They’re sitting on it.
Senator BIRMINGHAM -They are sitting on it indeed, Senator Cormann. The minister revealed that he had had a knock at the door at six o’clock on a Friday night to say, ‘Minister, here’s your implementation study.’
Senator Cormann -Interrupting his snowboarding.
Senator BIRMINGHAM -It could have been interrupting anything, I guess. It was far more likely to be interrupting the minister’s soccer viewing. So the minister has his implementation study. Given that it is canvassing all of these issues-pricing, probity, delivery to rural and regional Australia, cabling, aerial deployment, shareholding, pricing; you name it, it is canvassed in the implementation study-I assume it was a large truck that rolled up to Senator Conroy’s door at six o’clock that Friday night to deliver him the implementation study.
I can tell the Senate what would make life easier for Senator Conroy and make it easier to digest his implementation study, and that would be for him to release it instantly. If he were to release it instantly, I can tell you that there are many people on this side of the chamber, many people on the crossbenches, many people in the telecommunications sector, many business analysts and many reporters who would all love to help Senator Conroy assess the validity of his implementation study. But, most importantly, we would all love-particularly those of us who are asked to make judgments on significant and important legislation like this-to know whether it all stacks up, whether it will all work out or whether it is just going to go the way of National Broadband Network stage 1. Eventually, after millions of dollars have been spent on consultants, after the government has built up expectations throughout the community, after the government has baffled investment in so many other areas of the communications sector-because nobody wants to act, believing that the government is going to come charging through like a herd of elephants and trample all over this sector-we want to know whether it is going to stack up, whether it is actually deliverable, whether Australians will take it up, at what price it is going to have to be subsidised and whether indeed the private sector investment that the implementation study says is needed to make this happen will occur.
We want to know the answers to all of those questions because we are trying to take a responsible approach from this side of the chamber. We are trying to assess whether or not what the government says it can achieve by this can be achieved by this before we go and give it a blank cheque. This bill is effectively a blank cheque to the minister and the ACCC to tear apart the structure of Telstra, to potentially jeopardise the delivery of wireless services in Australia for years to come and to do so without having provided us with the answers to any of the fundamental questions. I and the rest of the opposition will continue to argue against this until such time as Senator Conroy comes into this place, answers questions and gives us his implementation study, rather than continuing to bat them away, saying it is in the never-never somewhere.