Strategic Review of the National Broadband Network




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Well might the minister say, ‘Welcome to the real world;’ we say, ‘Welcome to the world of broken promises.’ Today is a day that the government will rue for a very long time.

Today the Abbott government is breaking one of the biggest and most important promises that it made in the last election campaign.

This government has been in office for barely three months—a little over 90 days—and yet it is breaking promises left, right and centre: first on debt, then on boats, two weeks ago on education and now on the NBN.

This is a betrayal, a broken promise that will hang like an albatross around this minister’s neck.

It is an unforgivable broken promise and this government will be punished by the electorate for it.

Remember the press conference with Sonny Bill Williams in April of this year? A press conference with the virtual Sonny Bill, the now minister and the now Prime Minister at which the Prime Minister uttered these immortal words:

‘Under the coalition by 2016 there will be minimum download speeds of 25 megabits,’—not anymore. And these: ‘We will deliver a minimum 25 megabits by the end of our first term.’ Today they are breaking that promise.

Before the election they promised: ‘No excuses.’ Today we get a tawdry list of excuses from this minister.

Before the election they said: ‘No surprises.’ Today we get the worst of all surprises from this government.

Remember the words of the Prime Minister when he said:

‘I do not intend on making promises I won’t keep’

He has broken a whopper today.

It was one of the biggest and most important promises that the government made—and the minister, from the look on his face, knows it—to the Australian people at the last election.

What it means is that you cannot believe anything that this government says—not on debt, not on boats, not on education, not on the NBN. Nothing they say is worth two bob.

Here is the truth.

Deputy Speaker, I seek leave to table the NBN Co.’s Assessment of the Coalition’s Broadband Policy prepared during the Caretaker period.

The minister for transparency has just told us exactly what we need to know. This was never about getting us all the information; this was always a stitch up. If he was ever interested in the truth he would be prepared to allow us to table this document now.

Deputy Speaker, I am holding the real strategic review of the coalition’s dodgy second-rate NBN plan. It is the unadulterated, unamended, uncensored version of the coalition’s plan. It was written before the minister sacked the experts at the NBN and put his mates in charge. It is the report that the minister does not want the people of Australia to see. It is the secret advice that was given to the minister in his first weeks in the job but he never released until today.

The minister says that this is an old report: it is dated Friday, 20 September. It is a 154-page document, very detailed, and, funnily enough, it does not say what the minister just said. It paints a very different picture. It is a scathing document, scathing of the coalition’s plan. One: it says building the NBN in two stages is the wrong approach and is ‘not recommended’. It says it would cost more and take longer. Two: it says the coalition’s election promise that all Australians will have access to speeds of 25 megabits by 2016 is ‘unlikely to happen’. Now we know why they said that.

Out of the minister’s own mouth, indeed. Three: it says the coalition’s plan will result in lower revenues of up to 30 per cent, which will impact on the ability of NBN Co. to raise debt. Four: it says no-one knows how much it will cost to fix Telstra’s old copper network so it can be used for the NBN—not Telstra, not the government and not NBN Co.

Five: it also says that the cost of maintaining the copper network is estimated between $600 million and $900 million per year. That is between $6 billion and $9 billion over the next decade just to maintain the old copper network. Six: It says the coalition’s promise of minimum speeds of 50 megabits per second by 2019 cannot be guaranteed using copper. Seven: it says the coalition’s slower speeds would compromise the provision of tele-health, distance education and other business applications.

So, all up, what does this report say? It says the coalition’s plan is a dud. It was a dud in April and it is more than a dud now. It is a litany of betrayal by this government, who promised one thing before the election and who is now, after having perpetrated a deceit on the Australian people, breaking their promise today. What we know in this document and what has been proven by what the minister has said today is that the NBN will now take longer to build than they promised before the election; it will make less money; and it will not meet the needs of business or families. In the end, we are going to have to come back and finish the job.

The minister has said a lot about costs in his speech, and we should not be surprised. Remember: the capital cost of building the NBN has been outlined in the NBN Co.’s corporate plans. In the corporate plan 2012-15 it was $37.4 billion. In the corporate plan 2013-16, leaked to the Australian Financial Review, it was $37.4 billion. In version 13 of the corporate plan, which was prepared by NBN Co., given to the board on 20 September and is sitting on the minister’s desk right now but not released, it is $37.4 billion. All of these accounts have been ticked off not just by the company but also by the board—including two members of the board who were there in September and have been there for all of these corporate plans—and have been audited and verified by the Australian National Audit Office, by Ernst and Young and by KPMG. So these costs are verified in government, Finance, Treasury as well as these other organisations, and now, suddenly, it has all changed. Suddenly, the experts have been sacked. People have been brought back in and we have got a different answer.

Some people might be surprised that all of this information is now out of date, but I am not. For the last few weeks, I have been warning the Australian public that this would happen. I did it again on the doors today, and I have been proven correct today. You only have to look at what Brad Orgill said in a column that he wrote for the Financial Review a few weeks ago to know why this is the case. This is what Mr Orgill said:

Selective data, conservative assumptions and extrapolations out to 2021 could be formulated to argue why the NBN might have comprehensively blown out its costs and not achieved its objective. It would be a continuation of the Coalition’s attacks from opposition on NBN management and the board including threatening a Royal Commission of Inquiry.

In other words, change the assumptions and you get a different result. You do not have to think hard to see how this has been done.

Mike Quigley, the former CEO that the minister likes so much, said this last week:

Rates to build the fibre network based on the existing design and architecture were rising. But those rate increases would not have produced a cost increase because we had identified and validated, network and design changes that would have offset those increases.

He goes on:

Which is why I find it incomprehensible to hear the suggestion that the increases in LN/DN rates should be built into the forward projections and cost reductions that have already been identified, should not be.

Here is the killer:

Unless, of course, your objective is to try to confirm a pre-conceived position.

The minister in his contribution talked a little bit about copper and the work that has been done in the strategic review to cost that copper. The fact is that, in this report, there is no detail about the exact amount that it would cost to fix and then to maintain the copper network. Three weeks ago the minister said at a CommsDay conference:

We want hand on heart true, realistic and achievable options prudently costed and scoped on which we can make weighty decisions.

My argument to the parliament today is that this report does not do this. It fails to provide this information. It fails to provide the exact information we need on how much it will cost to fix and then to maintain the old copper network. It gives estimates. It gives international comparisons. It gives, as the minister has just said, conservative assumptions. It does not reveal them and does not provide us with the information we need.

This report, which the minister will not let me table in parliament, does. It tells us that the cost of maintaining the old copper network could be between $600 million and $900 million a year. So it is between $6 billion and $9 billion to maintain the old copper network over the next decade. My argument to the parliament is: wouldn’t that money be better invested in building a fibre network than keeping the old copper network going?

The most important thing today, the most important thing in the report and the most important thing in the contribution that the minister has made today is the admission that he is breaking a promise to the Australian people. This is not the only broken promise that he has made today, but it is worth remembering that it is still on the Liberal Party’s website. It might not be now; it was when I came down to the parliament. This is from the Liberal Party’s website:

Download speeds of between 25 and 100 megabits per second by the end of 2016 and 50 to 100 megabits per second by 2019.

Not anymore. But, as I said, it is not the only broken promise here. The minister has also said that he is going to pair back the number of houses that are going to get fibre to the node. In the policy that he put out before the election, he said that 8,968,000 people will get fibre to the node—you know this is true; 71 per cent of the population, now, gone. All the rest of those people are going to have to rely on the HFC network. The minister said that he is going to fill the gaps there. But will it be an open access network? And who is going to pay to connect the coax from the pole to people’s houses? Is it you? Is it NBN Co.? Is it the people who live in those houses? And, if they do, well, who is going to pay that extra money?

The minister has promised that this would be a faster, cheaper NBN. What we are getting here is a slower, potentially more expensive NBN—slower because internet speeds will be slower under this model than they would be under ours, slower because this minister has just broken promise to deliver it by 2016 and, potentially, dearer because people in the bush are going to pay more than people in the city.

This is the biggest and most important infrastructure project in Australia. Remember: we sit on the edge of what will be the biggest middle class that the world has ever seen. Our challenge in this parliament is to make the most of it. We often call this the Asian century; it is also a digital century. The wealthiest countries in the decades ahead will be the smartest countries, the countries with the best educated workforces, with the best access to information and with the infrastructure to drive that. That is why the NBN is so important. It is the engine that drives jobs, create companies, builds productivity, increases trade and makes us a stronger economy and a fairer country. It will help to build the Australia of our imagination.

Now, because the NBN is so important, it is important that it be done right, and that means using fibre, not copper which we are going to have to come back and replace down the track. The minister keeps telling us what the old, decaying economies of Europe are doing. That might be right; they might be investing in maintaining their copper. But we are not part of Europe. We are part of Asia, the dynamic and growing Asian region, and this region is investing in fibre. Japan, South Korea and Singapore are all investing in fibre to the premises. So is New Zealand and so should we; otherwise, we are putting ourselves at a disadvantage. We will be left behind with a second-class, second-rate national broadband network and, we learned today, one that will not be delivered on time. Of all days to learn this, it is the day after finding out that Holden is shutting its doors, when we should be thinking ahead, thinking about the future, thinking about where we invest to make sure we have a strategic advantage and can compete in the Asian century to set ourselves up for the future. This government is not doing that.

I have said this before but it is worth saying again. When Robert Menzies was in opposition in 1949, he was one of the biggest critics of the Snowy Hydro scheme. He criticised it up hill and down dale. Two months before the 1949 election, Menzies refused to attend the launch of the Snowy Hydro scheme; but, when he became Prime Minister, he changed his mind. He supported it, he funded it and he built it. At the opening of I think it was the Tumut dam project in the fifties, he said:

In a period in which we in Australia are still, I think, handicapped by parochialism, by a slight distrust of big ideas, of big people or of big enterprises … this scheme is teaching us and everybody in Australia to think in a big way, to be thankful for big things, to be proud of big enterprises and … to be thankful for big men.

Menzies was a big man, but there are not too many ‘big men’ on that side of the parliament, just broken promises, one after the other—debt, boats, education and now the NBN.

We have a Prime Minister who does not understand how important the NBN is, how important this infrastructure is. He has described it as ‘essentially a video entertainment system’. In The Washington Post only a few weeks ago, he called it ‘wacko’. But he has also described himself as ‘the infrastructure Prime Minister’. If you are going to be ‘the infrastructure Prime Minister of Australia’, then you need to build the infrastructure of the 21st century, the infrastructure that Australia needs—and guess what? That is what this is. That is what the NBN is. It is quintessentially the infrastructure of the 21st century, and you cannot be ‘the infrastructure minister’ or ‘the infrastructure Prime Minister’ unless you are investing in building the biggest and most important infrastructure project in Australia.

Today, Paul Keating is visiting Parliament House for only the third time since he retired. Paul Keating, like Menzies, knew the importance of the big calls in government and getting the big calls right. It was his decisions that set Australia up for a staggering 20 years or more of uninterrupted economic growth. In large part, Paul Keating built modern Australia. He built the Australia that we are living in today. The big decision we need to make today is whether we are going to build the infrastructure that we need for the next century or just for the next few years. Our responsibility is to govern not just for this generation but for the ones that follow. The pace of change and the challenges ahead demand it, and there is no better example of this than the National Broadband Network. Menzies knew it, Keating knew it and we know it, but this government obviously does not. Today they have made a very big mistake. They have betrayed the trust that was put in them by the Australian people, and for that you can be sure they will be judged very harshly.