Julian McGauran (Victoria, National Party) Share this | Hansard source

This is a bill, I will repeat, born out of threats and intimidation by a desperate government towards one of Australia’s internationally labelled companies, one of Australia’s largest companies. It has, I believe, some two million mum-and-dad shareholders, so it is one of the largest dispersed shareholdings in Australia. This government is legislating to break it up, Venezuela-style. This is unprecedented in Australian history. It has sent a shudder through the market, and Telstra shares have duly been affected.

The government are attacking a privately listed company, forcing it to be broken up, for one reason: to prop up their ailing federal election campaign policy, their field of dreams. This legislation will hit the telecommunications market’s confidence. Senator Back, before me, talked about the integrity of the whole market nationally and internationally. Do not think they are not watching this, and do not think future investors will not be scared off by this. This is an unprecedented step in corporate bullying and, rest assured, it will eventually backfire on the government. The legislation, whilst compensating Telstra to a degree—some $11 billion—effectively hands over Telstra’s infrastructure, all its pits, and ducts and backhaul fibre, so that the NBN Co. can exclusively use it to lay their fibre. The legislation before the Senate is a valiant attempt to plug just one of the viability leaks that the NBN Co. has sprung. Without the exclusive use of Telstra’s copper infrastructure network, the government policy of laying the broadband network to some 90 per cent of households would simply implode.

This will not save the NBN Co. The scheme is already starting to sink, and I make a prediction. As I have said on other pieces of legislation, I have to make my predictions early. Most likely, this time next year the company will signal its distress—along with the minister’s distress. Firstly, take the implementation report, the McKinsey report, for which McKinsey were paid—although I do not want to be sidetracked by how much consultants are paid by this government—an incredible $25 million. I would like to know—perhaps I will have to wait until estimates—whether that is not one of the highest consultancy fees ever paid.

We have been denied access to the business analysis and there has been no cost-benefit analysis but we can garnish from the implementation report, the McKinsey report, certain business facts and realities. The McKinsey report established a rate of return for the company of, at best—it was going to give a glowing report—eight per cent, provided there was a 90 per cent take-up and provided the company borrowed at risk-free bond rates. That was the standard that had to be set for the company to return even an eight per cent rate. Well, you can kiss private investment goodbye if that is the return rate for such an outlay on such assets. But besides that, just for the NBN Co. alone—the government-owned monopoly alone—the assumptions were of eight per cent on a 90 per cent take-up on a very low borrowing rate. That is the cornerstone of the viability of the company. All the assumptions are utterly flawed.

Take Tasmania, where they are rolling out the fibre, as an example. To date there has been a take-up rate, I have been informed, of as low as 11 per cent. We do not know how much of that 11 per cent are 100 megabytes, or even whether it is the whole 11 per cent. In response to this viability leak the government want the states to move legislation to prop up this ailing NBN Co. They want the states to move an opt-out clause: you will get your fibre whether you like it or not unless you sign an opt-out clause. Tasmania has agreed to force people into take-up but, rest assured, I hear the other states are not. They are extremely reluctantly to do that.

Can’t you see the mire that is being created? Every time there is a viability leak in terms of this company the government has to move legislation to fix it. The second thing garnished from the McKinsey report regarding the viability of the NBN was cost blowouts. The McKinsey report did not factor in any cost blowouts but there are cost blowouts all around the government. They must be petrified about how much this is really going to cost them. The first blow-out is in relation to new properties in housing estates. Confusion reigns. Who is going to pay—the developer or the government?—for the connections in the new housing estates? Before the election the government said—naturally they said it before the election; they said a lot of things before the election—that the government, the NBN Co. would foot the bill for the new housing estates. Now we are told that the government are considering—guess what?—more legislation to plug up the viability leaks of NBN Co. They are considering legislation to force the developers in new housing estates to put in the connections.

But it gets worse in regard to the blowouts in terms of old multi-dwelling units—the big housing apartment blocks. The NBN Co. have said that they will refit and rewire these old apartment blocks. I am not talking about those two- or three-storey seventies blocks; I am talking about multistorey buildings. In fact, I am informed that those buildings make up one third of Australia’s dwellings. The NBN Co. never factored that in. It is not factored into their business plan; I am sure of it. I will tell you why: when asked, they duck for cover. That is the surest sign that they have not factored these cost blow-outs.

And there is another cost blow-out coming. The unions are circling the company. I am not surprised at all. The ACTU is circling the NBN. They want their slice of the collective bargaining too. It may be like the Victorian government’s Royal Children’s Hospital or the desalination plant. The unions got hold of those two government projects, shook them down and increased the cost of construction enormously. They probably doubled the cost. I am willing to say it doubled; someone can prove me wrong. If anything like that happens then NBN Co. is in for a big blow-out when the unions want their slice of this cake. And they will get it too. Let me tell the directors of the NBN: you will not get any hope or satisfaction from the Labor government; they will cave in as quickly as they can. After all, it is only taxpayer money! Do not think Senator Conroy is going to defy the union. Do not think he could put up with a strike on the premises of the NBN or a slowdown of the rollout because of the union. That is another cost blow-out on its way, and none of these has been factored in. All the figures are rubbery.

This is a waste of unimaginable proportions. I heard that the minister at question time was even playing down the figure. It is not $43 billion any more; our contribution is actually less. Is it around $26 billion?