Speech to Parliament: Matters of Public Importance - National Broadband Network

According to the member for Braddon, on this side of the House we are being obstructionist and negativist to ask questions about the detail of the National Broadband Network as planned. The question is: how bad does an idea have to be before it is okay to ask some sensible questions about it? Let us be clear: we are not against broadband; very far from it. What we are against is an ill thought through, ill conceived, extravagant, badly planned venture that does not have substance and detail behind it. If that plan is before the Australian people, we say that before it is executed there ought to be a rigorous cost-benefit study conducted.

I want to make three points in the brief time available: firstly, that the history of Labor’s broadband policymaking has been acutely political rather than focused on good policy; secondly, that Labor has made a very poor case for the plan it has put before the Australian people; and, thirdly, that therefore we need a cost-benefit study to make a sensible assessment of whether the nation ought to spend $43 billion on this plan.

Labor’s policymaking has been acutely political since Labor announced in March 2007 a plan to spend $4.7 billion of public money to build a 12-megabit-per-second fibre-to-the-node network to serve 98 per cent of the population. That was a plan that was cobbled together based upon details of a proposal that Telstra made to Prime Minister Howard in 2005, subsequently released to the stock exchange, which in a footnote said that Telstra, as an offer to the government, would be prepared to build a 12-megabit-per-second network nationally in exchange for a subsidy of $4.7 billion together with complete relief from the access requirements so that the network would become an effective monopoly. The Howard government rejected that proposal as unacceptable on competition terms. But Labor were keen to jump on it in early 2007—desperate for a policy. They did not worry about the fact that the details of the Telstra proposal involved a mix of technologies—cable, copper, satellite, wireless. No, apparently it was all going to be fibre-to-the node nationally for $4.7 billion.

When they got into government the first thing they did was junk the well-developed, well-planned Broadband Connect policy which would by now be serving hundreds of thousands of people in rural Australia with broadband were it not for the fact that Senator Conroy cancelled it after repeating time after time during the 2007 campaign that he would honour the OPEL contract—one of the many shabby moments in Labor’s disgraceful political exercise when it comes to the politics of broadband.

The best moment is when we get to April 2009 when Labour realised it had a huge problem because it could not execute the policy it promised to the people in November 2007. What therefore did it do? It decided in a purely political gesture to say, ‘Let’s double our bets and we will now go forward with a fibre-to-the-home proposal and we will dazzle them with talk of $43 billion.’ There was no detail behind it. The Minister for Broadband, Communications and the Digital Economy, Senator Conroy, himself has admitted that the plan was approved in a two-hour flight between Melbourne and Brisbane in a discussion between him and Mr Rudd, the then Prime Minister—you might remember him. All of the details substantiating that plan could be written on the back of a beer coaster. What a disgrace. The essence of this plan which is before the Australian people is pure politics and no substance.

My second point is that Labor has made an appallingly poor case for this plan. Why is it proposing to trash a perfectly good copper network rather than use it as the basis for building something new? Why will the National Broadband Network overbuild the HFC networks which serve nearly one-third of Australian households and which can readily deliver 100 megabits per second and in Melbourne already do? Why is Labor proposing something which would be illegal under the Trade Practices Act as it stands today? The only basis upon which its plan can be delivered involves one company in an industry, Telstra, agreeing to exit so that the other company coming into this industry, NBN, has the field free and clear for it to establish a monopoly. That would be illegal under the Trade Practices Act and the only way it can happen is because of the grubby amendment that Stephen Conroy has put before the House in the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010 that we are considering this week.

Where are the productivity benefits that are promised? We hear about telemedicine. We never hear an explanation of why that requires fibre connected to 10 million homes. There are 1,300 hospitals in Australia. By all means, have fibre to 1,300 hospitals so we can do the direct scanning from the bush hospital into the city, but you are never going to have people having a CAT scanner in their kitchen. It makes no sense at all to fibre up every home on the basis of telemedicine. And where is the evidence that we are going to get millions of people taking this service when we know that fixed line broadband take-up has stalled in the last couple of years and most of the take-up now, most of the growth now, is in wireless? Unless we get the take-up that is unrealistically expected by Labor, this plan is going to be a financial disaster. And why has broadband policy been outsourced to Mike Quigley and the management team of NBN Co? It seems to now be making decisions that it will own the wireless network, it will own the satellites and it will operate them, even though the McKinsey $25 million study expressly recommended against that.

That brings me to my third point: why do we need a cost-benefit analysis study? Because we know the work has not been done. We heard again some verbal gymnastics from the Minister for Infrastructure and Transport earlier on attempting to insinuate that there had been a cost-benefit study. Let me again, for the record, quote from pages i and ii of the implementation study:

Explicitly it does not undertake a cost-benefit analysis of the macroeconomic and social benefits that would result from the implementation of a super fast broadband network.

Minister, let us not come into the House with that misleading claim any more. There has been no cost-benefit study and we critically need one. We need to make an assessment of whether this is a sensible use of public money. If you want to make the case that this venture is going to generate an attractive return, then you need to have a business case. The one that has been produced so far in the implementation study is weak in the extreme. It is based upon unrealistic assumptions and, in any event, Mr Quigley as the Chief Executive of NBN Co. keeps walking away from it saying, ‘Well, that is not my business case; that is the implementation study.’

But the second question is: if we are to believe the claim that there are benefits to the nation which exceed the costs of building this network, if we are to believe the claim that there will be benefits in terms of productivity, medicine and education, then let us see the evidence. Let us see the systematic and careful quantification of those benefits. How many hospitals? How many scans? How many students will be educated? What will be the cost savings? Let us see those details in considering this bill, which calls for the highly respected Productivity Commission to conduct just such an inquiry.

Let us ask the question: why is it that Labor have been running so fast from agreeing to a perfectly sensible proposal? What have they got to hide? Is it just possibly the deep-seated fear that something that was dreamt up on a two-hour flight from Melbourne to Brisbane—all of the details of which could be written on the back of a beer coaster—would not stand up to detailed scrutiny? In fact, spending $43 billion on a broadband network to overbuild a large amount of existing broadband infrastructure is not the best use of scarce public funds as compared to all of the other many good claims on the public purse—schools, roads, hospitals, all of the other things that governments are called upon to do. Would it not be more sensible to leave it to the private sector to build most of this network, as they have over many years, and focus government intervention on the areas where the private sector will not build? The Australian people have a right to a detailed and sensible analysis of the costs and benefits of this network, and that is what we are calling for in this bill.