Deborah O'Neill (NSW, Australian Labor Party, Shadow Assistant Minister for Innovation) Share this | Hansard source

I rise to speak on the Telecommunication Legislation Amendment (Competition and Consumer) Bill 2018 and the Telecommunications (Regional Broadband Scheme) Charge Bill 2018. Labor will be proposing several amendments. We will seek to reduce the scope and the impact of the $84-a-year internet levy on households connected to existing greenfield networks. This will buy sufficient time to ensure future arrangements can be reviewed in appropriate time in conjunction with broader reform decisions. Greenfield networks are small, non-NBN operators who typically deploy fibre in new estates in outer metropolitan suburbs. Second, Labor will seek to cap the government's levy charge to prevent the possibility that the base charge could increase to $10 per month, as currently allowed for under the draft legislation. Third, Labor will introduce a series of NBN related transparency amendments which seek to improve the public availability of rollout information, improve transparency of the network, and improve transparency over the business case.

Before moving on to the broadband levy, I wish to note Labor supports schedule 3 of this bill. The proposed statutory infrastructure provider—SIP—scheme will provide certainty that as we move beyond the initial NBN roll-out in 2021 the community will continue to have certainty about its ability to get access to broadband services at their new home or business. In the House of Representatives the Minister for Urban Infrastructure and Cities, bizarrely, declared this bill to be an 'historic' reform. It is, unfortunately, nothing of the sort. We would encourage the government to refrain from such exaggerations here in the Senate. In practice, schedule 3 largely codifies an obligation that already exists in the NBN statement of expectations. There is nothing historic about this kind of reform.

Furthermore, the bill proposes to put this, in effect, after 11.6 million premises have already been passed by the National Broadband Network. So, let's be clear—the primary function of schedule 3 is to provide certainty about the status quo from 2021 onwards. Labor supports this, and considers it is a sensible and natural step, but let's not misrepresent what it actually means.

In contrast, the original commitment by Labor in 2009 was historically significant, particularly for regional and rural communities. A national broadband network was established to ensure that every Australian would have access to high-speed broadband irrespective of where they lived or worked. As a result, nearly three million homes and businesses across rural and regional Australia will have access to high-speed broadband, a sizeable proportion of which had no access to any broadband after 11 years of inaction under the Howard government. This was the single most important initiative to bridge the city-regional divide when it came to broadband in this country. Labor is proud of this achievement, and those who supported it in the Senate should be as well.

Unfortunately, the same cannot be said for this government's support. On 25 March 2011, the coalition voted against legislation to establish the NBN to deliver universal access to high-speed broadband for all Australians. The National Party voted against it. This very Minister for Communications voted against it. Schedule 3 is a concession that the coalition, who left regional Australia in a broadband backwater, have now signed up to a principle Labor and the parliament established nearly a decade ago. Schedule 3 is a sensible step and we will support its passage.

I now wish to turn to schedule 4, the government's broadband levy. Against the backdrop of higher energy bills and cost-of-living pressures, this government is today seeking to increase household broadband prices. It's also notable that the minister has delayed debate on the bill for over 18 months and its implementation by two years. So what we've seen, effectively, is delay, delay, delay. When the minister released the draft legislation in late 2016, he stated the government's intention was for the legislation to come into effect on 1 July 2017. Six months later, he changed the start date to 1 July 2018. And today the minister brings an amendment to push the start date back to 1 July 2019. So what the minister's actually done is repeatedly delayed developments such that the implementation date of the proposed internet tax would become 1 July 2019, which conveniently for this government falls into the next term of parliament.

I ask my Senate colleagues: what does this mean? What does it tell us about what this minister thinks about his own policy? He knows that what he proposes will increase cost-of-living pressures on families. He knows that what he proposes is poorly designed, as argued by both the ACCC and the Productivity Commission. Moreover, the minister knows the revenue raised by this levy does not address the long-term economics of the multi-technology mix, nor does it establish a sustainable funding mechanism or do anything for regional investment.

If anyone is wondering why the minister is now suddenly in a rush to pass this legislation in August, let me offer a potential explanation. NBN Co is due to release its corporate plan before the end of August 2018. This is the latest NBN corporate plan that will be issued prior to the next election. It's the last one that we'll see before we head to an election. The corporate plan will contain forecasts out to financial year 2022 but will not disclose the assumptions that underpin revenue and cost forecasts beyond that year. If the government passes this bill in August, not only would the price increases from the levy come into effect in the next term of parliament but it would also permit the government, in this term of parliament, to add the revenue from this internet tax into the NBN corporate plan from 2022 out to the year 2040. So what we're seeing is a government that have determined to take an opportunity to fudge the numbers, having undertaken delay, delay and delay. It just shows how desperate the government are.

Meanwhile, the NBN has spent over $177 million on buying new copper cabling. It's hard to put 'new' and 'copper' in the same sentence, but that's what this government have done, and they've done it to the tune of $177 million. They've wasted millions of taxpayer dollars on pointless advertising campaigns and their executives were paid over $66 million in bonuses last year—all this with little to no oversight from the government whatsoever. The proposed levy before the Senate is, in effect, an internet tax that will increase the internet bills of households and businesses on non-NBN networks by up to $7.10 per month, or $84 a year. Estimates of the number of services affected by this levy range from between 240,000 to 450,000, with that number growing over time. The levy charge could increase over time to $10 per month, or $120 a year, based on how the legislation is currently drafted. To be clear at the outset, Labor considers the broadband levy to be poorly designed, the targeting of certain networks to be arbitrary and the need to even contemplate its existence in this place to be highly regrettable.

It's important to note the government is increasing pressure on broadband prices across a number of fronts. It follows recent steps to establish the same wholesale NBN price for 12-, 25- and 50-megabits-per-second services, effectively raising entry-level prices for consumers by stealth. Further, the ABC has reported NBN pricing changes are also being considered that would force regional Australians on the NBN fixed wireless network to pay higher costs for the same speed as consumers in the city.

There's a clear link between the issues we are grappling with here today and the cost blowouts associated with Malcolm Turnbull's multitechnology mix. In 2013, the now Prime Minister promised to deliver the NBN for $29.5 billion and he promised to have it complete by 2016. As it currently stands, the government are $20 billion over budget on the NBN and are four years behind what they promised Australians. That is clearly a failure and very, very different from what they said to the Australian people they were going to do. In November 2014, the Liberals promised to deliver the NBN for $41 billion. Again, as it stands, the government are $8 billion over that promise too. The multitechnology mix that they hailed so often as a great breakthrough has not been faster. It certainly has not been faster, but it's not been cheaper either. In fact, Malcolm Turnbull's multitechnology mix has been slower and more expensive. It's now forecast to cost $49 billion and will not be complete until July 2020. In comparison, the original fibre-to-the-premises model would have required $45 billion in peak funding, with all Australians having access to the NBN by the end of 2021. Every key assumption which underpinned this business plan has withstood the test of time. Whilst the cost per premise of deploying fibre has been reduced between 40 per cent and 50 per cent in New Zealand, in the US and in the UK, the build cost per premise of the HFC over NBN has increased by 54 per cent over the same period. Clearly there's something going wrong here under this government's rollout. Critically, beyond its $49 billion price tag, the multi-technology mix costs more to maintain. It generates less revenue and it's much more exposed to wireless competition. Fibre would have preserved an indefinite performance and reliability edge. Yet copper has already surrendered that edge, to the detriment of consumers and taxpayers.

It's interesting to note that modelling from the December 2013 NBN Strategic review indicates that the shift from a fibre model to a multi-technology mix would push up maintenance costs by $200 million per annum. Further, that same report indicated that a fibre network would have generated an extra $300 million per annum in revenue. Together, that's a $500 million earnings gap according to the government's own figures. This earnings gap is nearly two-thirds of the estimated losses in the satellite and fixed wireless footprint. It's more than 10 times what this levy is expected to raise. This is notable, because the 2013 Strategic review was a partisan document, quite literally drafted by the Prime Minister's mates, and was subsequently exposed as being predicated on assumptions that systematically overstated the cost and time to deploy fibre, while disingenuously understating the costs of switching to copper and HFC. Yet if such a flawed document concedes that the multi-technology mix has created at least a half a billion per annum earnings hole, we need to ask ourselves: what's the actual extent of the mess created by this government's mismanagement of the NBN?

Turning to specifics of this levy, the levy places the charge on a narrow base of networks, and in some cases is quite arbitrary in the networks it applies its levy to. For example, the NBN was set up to serve households and small businesses, because this is where market failure for high-speed fibre broadband existed. The enterprise market was well-served and had competition. The NBN wishes to compete in the enterprise market. Good luck to them. We genuinely wish them well. Yet the government is now proposing to tax enterprise networks, despite the fact that the arrival of the NBN is reducing the revenues of the incumbents who were previously competing and serving the market. It highlights the confused logic of this levy. The narrow base concentrates the impact on a few participants, while the revenue the levy raises is, in the broad sweep of things, immaterial to the challenges facing the NBN business case. It will be felt by those who are impacted but will do very little to support broader policy objectives. It's no surprise that the ACCC and the Productivity Commission have criticised the design of this levy. Further, the government is seeking to apply the broadband levy to greenfield networks that have already been deployed. This is despite greenfield networks being in new development estates, where NBN Co has not spent money, has not deployed a network, is not required to deploy a network and is not experiencing revenue leakage. This retrospective application is concerning. Greenfield network businesses are modest in their size and have made capital investments based on certain assumptions.

Given the legitimate concerns about the poor design and ineffectiveness of this levy, Labor will propose two key amendments. First, we will be seeking to cap the levy charge at $7.10. The current legislation allows it to increase to $10 per month—to put it another way, $120 per year. Capping it at $7.10 would not permit this to happen. In a scenario in which the levy charge increased to $10 per month, it would be unfair to families and distortionary to the telecommunications market. It remains unclear whether the charge could reach that level, but given the lack of transparency from this government on the costs of the rollout and uncertainty over the number of premises within scope of the levy, the Senate should not be willing to take that chance. This amendment is a prudent safeguard to protect consumers and households from further unintended impacts of the levy.

The government has sought to argue that the levy as drafted establishes a sustainable long-term funding mechanism for the non-commercial parts of the NBN network. The NBN's CEO does not sign up to this view, because in October last year he called for a tax on wireless services. The ACCC does not sign up to this view, and the Productivity Commission does not sign up to this view. In its communications market study, the ACCC observed:

Greater substitution across technologies would also bring into question the suitability of the RBS charge as a mechanism to fund non-commercial NBN services.

This view has also been put by the Productivity Commission in its review of the USO, where it observed:

The funding of nbn's non-commercial services should, moreover, not be considered independently of universal service policy reforms.

…   …   …

The Regional Broadband Scheme is proposed to (at least initially) include only a narrow levy base. In principle, the choice of funding model for non-commercial services should seek to minimise distortions in the telecommunications market, the risk of which is heightened with a narrowly-based long-term industry levy. As such, the Government may need to revisit the merits of alternative funding arrangements for nbn's non-commercial services.

Clearly, these two expert bodies are saying this levy will not stand the test of time. By capping the charge at $7.10, Labor is making clear it does not have confidence in the government's arguments either.

Labor's view is that the most useful policy function this levy can perform is to establish a price signal that deters the inefficient duplication of fixed-line infrastructure, deters cherry-picking of profitable parts of the NBN footprint and establishes a more level playing field in the market segments where that's appropriate. Labor has consulted broadly with the sector on this principle, and the logic of our approach is respected and understood. The second change to the levy that Labor will propose seeks to provide concession for premiums connected to existing greenfield networks on 1 July 2019. We look forward to having our amendments considered by the Senate.