Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

The issue of cherry picking is a very important one insofar as what it actually says about this project. The fact that we have these provisions at all should sound a warning bell to the taxpayers of Australia, a very loud warning bell, in fact, because we have a situation where we have a business plan, much of it kept secret, but in that business case that we have had published—the small section of the total document—we see an internal rate of return of only seven per cent, a very, very low rate of return indeed. It is not a rate of return which would encourage investment in a project of this magnitude, not a rate of return that would provide the required return on capital. It really is a financial disaster for the taxpayers of Australia.

But when we look at the issue of why we have these cherry-picking provisions, it is to prop up that very poor and feeble rate of return. When we start factoring in real, live competition—competition that the businesses of Australia have to meet every day—then the project goes from abysmal failure to something far worse than that. We get to a situation where, when we factor in competition at an arms length without the protection of cherry picking, the IRR falls to a point where you cannot even cover the cost of the interest on the project.

It should be of great concern to the taxpayers that this government is going to invest in a project that is only kept viable through anticompetitive legislation. I wonder what the response of the government would be if one of our major corporates came to them and said, ‘Business is a bit tough. We are not really achieving the return we want for our shareholders, so we want you to put in a bit of legislation that is going to hamstring our competition, to prevent the competition from competing on a level playing field.’

This is a very bad outcome for Australia. It is a bad outcome because Australian consumers are being denied the benefits of a fully competitive market. Australian consumers are being denied the benefits of a market that would be encouraging innovation. Instead, we have a situation where the government has, through legislation, created a massive monopoly, a big fat monopoly. Competitive pressures are the way that we provide a better outcome for consumers, not through creating a massive monopoly. We have a situation where the government is propping up this monopoly through anticompetitive legislation. This legislation is going to effectively drive up the cost to consumers, drive up the cost to business and eliminate innovation. That is a bad thing for this country.

If the government is keen to ensure that we have the very best technologies and communications available to the people of this country then it should be encouraging innovation and competition. It should not be deterring it. If the government was really serious about providing the maximum return on funds invested, it would not be investing in a project that was only viable by virtue of anticompetitive legislation. It is an absolute outrage that the government would be investing in a project that requires not only a massive investment of taxpayers’ funds but an incredible anticompetitive regime to keep it vaguely commercially viable.

An IRR of seven per cent is far from commercially viable. It is not the rate of return that would encourage commercial investors to invest in the project. You would have to look in amazement at anyone who would commit $50 billion to a project on this basis. But, then again, if you look at the money that was poured into pink batts and if you look at the money that was poured into the BER, I guess the same sorts of decision-making processes apply. If there is a good outcome that can be spun, it is worth the risk to the taxpayer.

Question negatived.

Bill, as amended, agreed to.

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