Press Conference – NBN multi-billion dollar budget blowout







SUBJECT/S: NBN multi-billion dollar budget blowout

JASON CLARE, SHADOW MINISTER FOR COMMUNICATIONS: Good afternoon. This afternoon the Government has released an updated Corporate Plan for the NBN. We’ll go through the Corporate Plan in detail but this afternoon I just wanted to provide some preliminary comments.

Today it’s been revealed that the cost of Tony Abbott and Malcolm Turnbull’s second rate NBN has almost doubled.

First they doubled the deficit, now they have almost doubled the cost of their second rate NBN. Two years ago Tony Abbott and Malcolm Turnbull promised that they would build their second rate NBN for $29.5 billion. Today it has been revealed that that will now cost up to $56 billion. That’s the third cost blowout in less than two years, and that doesn’t include the cost of upgrading the NBN when the old copper network can’t cope in the future.

It is two years now since this government has been elected. In two weeks it will be two years since Tony Abbott was elected Prime Minister and they can’t blame this on anybody else. This has happened because they haven’t been able to keep their promises and because they got their assumptions on the NBN wrong.

The NBN is rolling out slower than Tony Abbott and Malcolm Turnbull promised it would and the NBN is now costing more than Tony Abbott and Malcolm Turnbull promised it would. There’s a couple of reasons for that. First is that the deal with Telstra to buy back the old copper network took a lot longer than they expected it would. They promised that would be done by the middle of 2014. That wasn’t completed until the middle of this year. As a result of that the rollout of the fibre-to-the-node network is way behind schedule. Malcolm Turnbull promised that that would be underway at scale by the middle of last year. Well it’s now the second half of 2015 and that still is not rolling out at scale.

The rollout of the HFC network for broadband is also way behind schedule. In the Strategic Review the Government promised that 2.61 million homes would get access to the NBN via the pay-tv HFC network by the end of next year. Today it has been revealed that less than a third of that number will get access to the NBN via HFC by the middle of 2017.

On top of that the cost of the new IT systems to run this second rate network has also blown out. We were told when the Strategic Review came out in December of 2013 that that would cost an extra $180 to $290 million. We are now old that will cost about an extra billion dollars.

So there have been blowouts and delays ever since Malcolm Turnbull took on this job. The NBN is the biggest and the most important infrastructure project in Australia. It will change the way we live. It will change the way we work. Most Australians get it. They want it. They want the NBN and they want the real NBN but unfortunately now under this government they are getting a second rate NBN. What we learnt today is that it will cost a lot more and Australians will get a lot less.

Happy to take questions.

JOURNALIST: The Government today has said that a lot of the problems it is facing with this cost blowout is mainly due to the executive that was put in place under your administration. What do you have to say to that? He’s saying that some of the people that were put in place under Labor didn’t even have proper telco experience.

CLARE: Malcolm Turnbull would say that. This is a distraction. It’s an old Malcolm Turnbull magic trick. Whenever he’s got bad news to announce he tries to distract attention by picking on the former Labor Government. But drill into the details of this Corporate Plan and you’ll find that a lot of the cost, a lot of the extra cost that they anticipate in building their second rate network has to do with the cost and speed of rolling out their fibre-to-the-node network and their HFC network. That will determine the final cost of this project.

JOURNALIST: What about the impact on households, it could cost some people up to $4,600. Is that a realistic figure for most people in the country to be able to afford?

CLARE: I’d have to get a bit more detail on what the Corporate Plan has actually said there. We’ll go through all the details of that. I think that’s referring to the cost to install rather than the cost to use the service. We will have a look at the detail of that.

JOURNALIST: The extra 26 billion dollars that they’re forecasting that it will cost to build the network, do you think that that needs to come from the private sector or will tax payers, do you think eventually be forced to stump that cost up?

CLARE: We’ll have to wait and see. They could draw that fund through the debt market, the government could borrow that money directly itself. Malcolm Turnbull suggested today that that was one option that he was looking at, he also looked at a government guarantee or an underwriting of that cost. The government hasn’t made a decision about that but we’ll look closely at whatever decision they make.

JOURNALIST: What would you prefer; would you prefer it to be privately funded, or for tax payers to pick up the bill?

CLARE: I make no comment about that at the moment. I am holding the government to account for its broken promises and for this massive blow out in the cost of the NBN. They said that they would be able to build it faster and cheaper. They said they could build it for $29.5 billion dollars. It’s now $56 billion dollars, this is a massive broken promise.

Everybody knows that Tony Abbott has broken his promises on health and education, and the pension but Tony Abbott and Malcolm Turnbull have also broken lots of promises on the NBN and this is a doozy.

JOURNALIST: Mr Turnbull said these figures are about transparency and that under Labor no-one knew about how much it would cost and how long it would take. What’s your response to that?

CLARE: Well today it was revealed that Malcolm Turnbull and NBN have known about this cost blowout since earlier in the year but the Australian people have been kept in the dark for months about this, so much for transparency.

JOURNALIST: Do you welcome any of the announcements they’ve made that there’s been an increase in revenue. They’re saying that revenue has doubled and mainly people are using it for streaming services. Those are the sorts of announcements they have made today. They state that about 1.2 million people can access it, do you think that that’s good or do you think that they should be moving a lot faster than that.

CLARE: Well it’s still not rolling out fast enough, you know this is the challenge, everybody wants the NBN, they want it in their home as quick as they can. It’s rolling out too slow, my major criticism of us in government was that it was rolling out too slow, it’s still rolling out too slow. We’ve got to roll it out quicker and the problem that I articulated earlier is that all of these targets all of these promises that Malcolm Turnbull made about getting fibre to the node and getting HFC to the home of millions and millions of people are not being met. They made big promises, they talked a big game and they are breaking their promises now.

JOURNALIST: Are you concerned that maybe Wi-Fi could start superseding some of the services that the NBN provides?

CLARE: Well Malcolm Turnbull made that point today. I think that most people, when they look at this know that fibre is the future. That fibre is the end game. The real question here isn’t whether we need fibre, but when. That’s why Labor said look if you need fibre lets do it in one go. What’s happening now is the government has decided that they’ll build it in two stages rather than one. But all of the experts, when they look at this project, when they look at fibre projects here and around the world they all say the same thing fibre is the end game.

JOURNALIST: As far as things that Malcolm Turnbull planned today the other thing that he said was that Labor was wrong when it was in government to try and build the NBN with the government on (inaudible) and that it should have perhaps gone to existing telco and funded it together. What’s your response to that?

CLARE: Well again this is all about distraction, try to distract the media from a multi-billion dollar blowout on a second rate NBN by talking about the past. This government has been in power for two years now. This has happened on their watch and this is a blowout caused by their mistakes full stop.

Okay, thanks very much.