Keynote address: Market Eye TechOps virtual investment conference

Thank you very much. I'm very pleased to have the chance to be able to speak to this TechOps virtual investment conference.

I want to start by mentioning a visit I took earlier this year to a company called Forge Pizzeria in Ballarat. As the name suggests, it's a pizza restaurant and also a catering business, with about 80 employees – full time, part-time and casual. So it’s quite a big business, and they have a 100 megabit per second NBN connection, and the owner told me that as a result of that they've been able to use cloud-based applications to help run the business.

It turns out that pizza ovens have network diagnostic capabilities – who knew that? But it also means that they're able to use cloud-based payroll software, human resources management software, and so on.

And there's one example, he said, that doing the payroll now takes him an hour, when it used to take him a day. That's an example of productivity in action, of being able to use cloud-based applications, because of having a high speed broadband connection. And it's also an example of the way that better broadband can bring productivity improvements to regional areas - in this case Ballarat.

So, the first proposition I want to put to you is that we are seeking to build a more productive and a more digital economy. And that is important and necessary for several reasons.

Firstly, we know our economy has a productivity problem. We saw quite significant productivity growth through the 90s, but since then we have not seen much in the way of productivity growth. And that's a problem, because the best way to get improvements in wages over time and to get improvement in prosperity over time is through improvements in productivity.

We know that there is a correlation between uptake of adoption of digital technologies and productivity. According to McKinsey study in 2017, a greater adoption of digital technology in Australia could boost our GDP by $250 billion a year by 2025, and economic consultants Alpha Beta in some work they did for NBN found a strong, positive correlation between a small business having a fast, reliable broadband service, and the productivity of that small business.

And so, the objective of improving productivity, and making a strong digital economy, is something that our government is focused on – indeed, our Prime Minister stated an aspiration that we will be one of the world's leading digital economies by 2030. We've had that aspiration for some time and what we have seen through COVID has only underlined the strength of this transformation that is occurring and the importance of it.

We have seen a massive jump in eCommerce. In the eight weeks after the pandemic was declared, there was a growth in eCommerce-driven traffic across the Australia Post network - bearing in mind that Australia Post is the market leader for parcel delivery, including fulfilment of eCommerce transactions. There was growth of 80 per cent year-on-year in some categories, with volumes up by up to 500 per cent.

One category that stands out, in my mind, from a presentation that Australia Post gave me was shaving goods - parcels containing products from shaving good suppliers are up 600 per cent. So there has been a sharp jump in eCommerce and much of that, I would suggest, will become permanent - even when COVID is forgotten.

So if our objective is a more productive and a more digital economy, let me turn next to talking about the importance of networks as the platform over which the digital economy operates. And I want to speak principally about the NBN, and I'll touch a little bit on 5G as well.

When we came to Government in 2013, the NBN was a failing project. There were only 51,000 premises connected to the fixed line network, after six years of the previous government and $6 billion being spent.

We developed the plan to turn that around with the multi technology mix - a combination of fibre to the node, fibre to the premises and HFC. As a result of executing on that plan, we are now at a point where 11.8 million premises are able to connect and 7.6 million premises are connected. The number of premises connecting every week is close to 30,000. Every two weeks, we are connecting more than the previous government managed to connect in six years.

All of the trends underpinning people's growing adoption of broadband have accelerated through COVID. We saw an overnight switch in which millions of people switched to working and studying from home, and millions of people using videoconferencing.

Just think about this for a second - the previous generation of broadband technology DSL does not have very good upload speeds. Download speeds are much lower than today but upload speeds are very low.  Videoconferencing needs both good download speeds and good upload speeds. So if we had been relying on DSL to work from home during the pandemic, it would have been a failure. Under the plan we inherited from the previous government, by this point, there would have been nearly five million fewer premises connected, or able to connect to the NBN, than are able to connect now.

So our approach of getting the rollout driven as fast as possible certainly wasn't developed with a pandemic in mind, but it's been very fortunate that we did take that approach.

Now what we have also seen is an acceleration in customer behaviour. In 2010, the average monthly download on fixed line networks across Australia was 10 gigabytes. By December 2019, it had reached 258 gigabytes. This is a very sharp and continued increase in the volume of data that people are consuming.

And then between December 2019, and June 2020 it went from 250 gigabytes to 300 gigabytes. So that increase, increased again. Those changes - that evolution in consumer behaviour - has been a key factor in the announcement that we made two or three weeks ago, about the next phase in the growth of the NBN.

Firstly, we announced a major increase in the provision of NBN for business. We are committing $700 million in investment to 240 Business Fibre Zones around Australia. Now, in a Business Fibre Zone, you will be able to order an optical fibre enterprise ethernet service, up to one gigabit per second, symmetrical. There will be no upfront charge to cover the physical cost of building the fibre to your premises.

Previously, there has been an upfront charge, which can be thousands, or tens of thousands of dollars. That has been a major disincentive for many small and medium businesses to get a business grade NBN service.

Secondly, until recently the pricing of wholesale broadband has been lowest in the CBDs of our big cities, and then successively higher in three geographic zones. We are now going to give all businesses in those 240 Business Fibre Zones around Australia, the same wholesale NBN pricing, as in the CBDs. That will mean cost savings of up to 67 per cent, in some cases, as to what it costs to acquire a wholesale business fibre service and that will be reflected in the retail prices. Some 700,000 businesses will have much better access at a lower price to business grade fibre.

The second part of what we announced was $3.5 billion to upgrade the residential network. The headline message here is that 8 million premises around the country, by 2023, will be able to order a service of up to one gigabit per second. Included within that 8 million, will be 2 million premises currently in the fibre to the node footprint, who will be given the option to order a fibre to the premises service.

Now I want to make an important point here: we're doing this in a very capital efficient way. We are going to roll the fibre down the street, but the fibre lead in from the street to the home will only be rolled out when the customer orders a service.

That is the way the very successful broadband rollout in New Zealand is operated and it is a principle we have decided to adopt here. What it means is that 8 million premises – 75 per cent of the fixed line footprint – will be able to order a speed of up to one gigabit per second blazing fast broadband by 2023.

Now let me also speak for a moment about 5G. 5G, of course, is the next generation of wireless mobile broadband. 5G offers three main benefits.

It's faster than 4G, offering speeds of one gigabit per second and higher.

It has much greater device density. What that means is that from an individual base station, the number of devices that can be connected is many more, by a factor of 10, 100, even 1,000.

And it has very low latency - the time taken for the signal to go from the device to the base station, into the network, to be processed and then come back. Low latency is going to be very important for things like robotics, automated vehicles, and so on.

So 5G will really be very important for the Internet of Things, this notion that we're going to have millions, potentially billions of sensors and other devices, feeding back data and in turn, informing business decisions.

Whether it is soil moisture monitors on farms, allowing much more informed decisions about how much water needs to be provided, how much fertilizer needs to be provided. Whether it's monitoring of the safety of bridges or buildings to prevent things like the dramatic bridge collapse we saw in Italy a few years ago.

These kinds of monitoring devices are going to be very widely used in very large numbers. They're going to be a very important part of smart manufacturing, indeed 5G will be a critical element of smart manufacturing. In the Budget, we committed $22 million for trials to test cases for business applications, industrial applications of 5G, and we'll be going out for a competitive selection process on that shortly.

Telstra and Optus both have 5G services now. Telstra can serve around 40 per cent of the population with 5G, and Optus has over 700 5G sites. We are continuing to make available radio frequency spectrum for 5G. Next year we will auction off the 26 GHz spectrum, which is very important for so-called ‘millimetre wave’. This is extremely high data capacity spectrum, and that will support some of the very high speeds I talked about. So we are supporting rolling out the networks that are the physical underpinning of a digital economy.

The third thing I just want to touch on briefly is to make the point that the physical networks and the work we are doing there is part of a broader plan to progress Australia as a digital economy.

Across a whole range of areas in this year's Budget you saw commitments to digitising, to make our economy more efficient, to make government more efficient. There was a multi-hundred-million dollar commitment to the work being done under the Minister for Government Services, Stuart Robert, for a universal digital identity.

People have been talking about this for 10 years or longer, but if we can have an authoritative, reliable, digital identity that allows so many other things to flow from it in terms of efficient transacting, needing to prove your identity only once, not needing to provide multiple copies of your driver's license, your passport, 100 points of ID to your bank, or your local council or your insurance company.

So the efficiency benefits from this will be very substantial, including transacting with government, and all levels of government – Commonwealth, state and local.

We have also seen reforms announced in this Budget to allow much wider use of digital signatures. Annual General Meetings of companies are being held virtually online, rather than physically.

We have an ongoing commitment to the Consumer Data Right. This is the notion that, as a consumer, your data should be yours to deal with. All of the data showing your relationship between you and your bank, you should be able to consent to make that available to any other bank or financial institution, so that they can have a look at it and say, ‘Well Mr Fletcher, you've been paying a 2.75% interest rate to ANZ. But we've had a look at all of your financial dealings, and we can give you 2.2%’ or whatever the transaction might be.

So we have legislated the Consumer Data Right for the banking sector, and we are pursuing the energy sector next. It is about the consumer dividends and the efficiency dividends from dealing with data, and from having a digital approach.

We have committed to Commonwealth agencies adopting e-invoicing to make transactions more efficient, with their small business and large business suppliers, to pay those invoices quickly. We hope that will spark a very rapid take-up of e-invoicing across the economy.

We provided an extra 10,000 places for the Australian Small Business Advisory Service Digital Solutions program to help support small businesses to use digital tools - such as the kind of things that Forge Pizzeria in Ballarat is using, that I spoke about at the start of this presentation.

So, in summary, we have an aspiration for Australia to be a world leading digital economy. It's important for a whole host of reasons, including making our economy more productive. We need to see more small businesses becoming digitally enabled. We need government to be more digitally enabled, and in turn, make it easier for citizens and businesses to do business with government. We need to make sure we have got the physical infrastructure, the networks there, to support this connectivity. And we've got plans across so many areas of government to become more efficient using digital technology.

By doing all of this, we can help build our digital economy, we can help make our economy more productive, and we can achieve our aspiration to be one of the world's leading digital economies by 2030.