Christopher Back (WA, Liberal Party) Share this | Hansard source

I continue my discussion of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 in the true spirit of the capacity of this place to scrutinise legislation and of assisting the government in its endeavours. Last evening, I alluded to my concern about the absence of a business plan for the NBN Co.—a business that as proposed, if successful, would be of some $43 billion. In the spirit of assisting the government I was endeavouring to prepare for them such a business plan. I had got to the section in the business plan of cost-benefit analysis. Last night I used the words of the Minister for Finance and Deregulation, Mr Tanner—regarded as being one of the more sensible members of the cabinet—who said that a cost-benefit analysis is a complete and utter waste of time. I made the observation last evening that we cannot possibly judge or vote on this legislation until such time as we are in possession of a cost-benefit analysis.

I was somewhat ridiculed for that, but, when I looked into this further, I found that I am joined in that view by various luminaries. Treasury Secretary Ken Henry, on September 2009, said:

Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing.

So we have the Treasury Secretary confirming that we should be scrutinising this. I go further. International specialist in regulatory economics Henry Ergas, said at the same time:

Taxpayers deserve better.

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This is hardly public policy as it should be. Nor is it structural reform. Rather, it is legislated blackmail. The legislation’s very vagueness makes this clear; what the government seeks is not a mandate for clearly defined change but an open-ended discretion to inflict massive costs, most immediately on Telstra and its shareholders.

Only last night we had the regrettable performance of Minister Tanner in the media, saying that the coalition is holding up the government’s business. Well, if the government had a business plan as part of its planning, we might not be in this position.

I go on in my business plan to the concept of competition. Anybody proposing a business would have a look at what was currently out there. As we have already heard in this discussion, there are some 175 carriers of communications services, 600 internet service providers, and three suppliers and providers of mobile services. What niche might the new NBN therefore obtain?

I ask: what is the imperative for this, given that it is already a very well supplied market? Those of us who use Skype, for example, know that we can communicate with up to four or five users around the world concurrently free of charge. So where is the imperative to commit the Australian taxpayer to $43 billion of expenditure? And as part of that process of competition I ask, particularly for an instrumentality that is government owned, as this one would be: where is the public benefit test in this whole NBN? We have already had established for rural and regional communities that that benefit is very, very limited. In the context of that public benefit I ask: what are the lost opportunities that would have come had we been able to expend those sums of money on other activities or in fact to reduce debt or to not impose or incur that debt in the first place? I ask the question with regard to the public benefit: what are industry trends? What is industry doing? What is communications doing? We know that it is rushing to wireless communication. We know the uptake of wireless communication and telephony is very, very high. Satellite communication has always been there and is becoming more effective and more efficient. So in the 18-year or so life that it will take to roll out the NBN, should it be successful, where will communications be? I hesitate to say that it will be copper wired. It will be wireless. It will be satellite. So this will be a waste of money.

Again under that public benefit analysis I ask the question: who is affected in relation to this particular exercise? We already know there are 1.4 million people, Australians principally, who are shareholders in Telstra. How will they be affected? I will come to that in a moment. We know that there are 30,000 workers within Telstra. We know there are nine million customers. All of these issues must be addressed, and they must be addressed by the government coming clean and giving us some indication of the information that they have. If they do not have it they should call a halt to this process until they get it, so that we can all enjoy it.

On the question of competition, we know that competition experts have joined us in criticising the government’s plan for Telstra to be disbanded the way it is and to be broken up and for the proposed National Broadband Network. One of the arguments that industry experts put is that it will result in yet another government owned monopoly generating very limited benefits. Who have made these points? None other than former ACCC chairman Allan Fels, who has said:

One must have a … real concern that the outcome of negotiations between Telstra and the government is that there will be a monopoly national broadband network, with Telstra and other major telco players all involved and with very little competition for anyone else.

He went on to say that ‘if the government was fully covered by the Trade Practices Act, its actions in refusing Telstra any new access to advanced broadband spectrum, which was needed for its future growth, would likely be an abuse of market power’. Allan Fels is saying the actions of the government would constitute an abuse of market power. It is a pure case of: do as I say but not as I do. I regard this, then, as an abuse of parliamentary process. Basically, we have a scenario in which people as independent as Allan Fels are expressing concern about the way to go.

What has the Australian Shareholders Association said? They have decried this proposal as lacking a ‘single positive aspect’ from shareholders’ perspective. ASA chief executive Stuart Wilson last year said:

I think it’s a giant kick in the teeth for Telstra shareholders. It severely damages the earnings potential of the company and there’s really not one good thing … to come out of the proposed legislation.

This is dangerous legislation if passed.

In the consideration of my hypothetical business plan to assist Minister Conroy I then underwent a SWOT—strengths, weaknesses, opportunities and threats—analysis. Not surprisingly, I could not find many strengths and I certainly could not find many opportunities, other than monopoly control of telecommunications. I asked myself the question: if the government considers Telstra to be a near monopoly and wants to break it up, where is the commercial or, in fact, the constitutional or the legal benefit in replacing it with another monopoly, on this occasion a government owned telecommunications monopoly? There just is simply no sense in the process. I found plenty of weaknesses and I found plenty to threats in the SWOT analysis. I certainly recommend that the government go back and do a very simple one-page SWOT analysis, and I dare say they will find exactly what I have.

In this process of business planning I came to the next critically important area, and that is risk analysis, in which you ask yourself: what is the likelihood of something happening that could be detrimental to, in this case, the Australian community and, secondly, what would be the impact of the decision if it went ahead? As you would expect, most commentators would agree with me that it is high risk: the likelihood is high, the impact is high. I will quote from an internationally regarded telcoms analyst, Mark McDonnell, speaking last year at a conference in Sydney, who said the NBN’s $43 billion price tag:

… does not appear to have been based on any kind of detailed study … specifically, there is no clarity around the underpinning assumptions or about the kind of network and industry arrangements implied.

He went on to query whether the putative $43 billion was ‘simply the construction and deployment costs’ or whether it did in fact also have ‘some allowance for start-up and operating losses’. His prediction was some $113 per month per customer if everybody was to actually sign up—in other words, 100 per cent penetration—but that that $113 would go up to $900 a month for customers if only 12 per cent participated in the process.

Only yesterday, Minister Conroy said to us in this place, ‘Your role is to scrutinise.’ How right he is. Our role is to scrutinise. He will not release an implementation plan only delivered to him last week and he cannot, surely, expect us to pass this legislation on that basis. (Time expired)