Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I present an interim report of the Senate Select Committee on the National Broadband Network.

Ordered that the report be printed.

by leave—I move:

That the Senate take note of the report.

Mary Fisher (SA, Liberal Party) Share this | Link to this | Hansard source

As chair of the Senate Select Committee on the National Broadband Network, I am pleased to have this opportunity to make a few brief comments, together with the tabling of the report, and I understand that some colleagues, fellow members of the committee, will seek to do likewise.

The committee heard from a range of witnesses with a range of concerns about the government’s promise to partner with the private sector to upgrade the existing network to deliver a minimum of 12 megabytes per second to 98 per cent of the Australian population. One of the most compelling concerns about which the committee has heard is that the government thus far has failed to provide guidance to any of the tenderers, potential tenderers or, indeed, the Australian population as to the composition of the 98 per cent national broadband network footprint and, in particular, the extent to which the national broadband network will benefit or not those Australians who are currently under-served or indeed not served at all.

In that respect, we heard evidence from the federal department about the fact that the department have not formulated a method by which to measure the achievement of providing the national broadband network, as promised, to 98 per cent of the population. The department essentially gave evidence that they do not have a formula by which they will measure the achievement of the government’s promise—yet, they attempted to promise that the promise will be met. It was a bit difficult to see how you can achieve a promise if you do not know how you are going to measure that promise. Indeed, through the process, we heard evidence that leads members of the committee very tempted to conclude that the government is conducting this process so that near enough will be good enough in respect of the tenders received. The government is unable to say who will get what, when, for how much and on what basis. It is unable to define the 98 per cent of the population.

The minister has indicated thus far, we think, that he is talking about providing access to 98 per cent of homes and businesses, yet the government and the department have not been able to provide any greater definition around that. Essentially, it was difficult to not conclude at this stage—noting that this report is an interim report of the committee and noting that the committee has until the end of March next year to conclude its inquiries and findings—that the government knows not what its promise will look like until it sees what the tenderers proffer by way of offer. It is difficult to not conclude that near enough will be good enough in respect of providing access to 98 per cent of the Australian population.

A major concern indicated during the inquiry, which is part of the failure to measure this promise, was the lack of clarity and, indeed, the lack of much detail at all about the regulatory environment into which the national broadband network will be taken. Tenderers and would-be tenderers have not been provided with sufficient information by the government about its views of what will be the regulatory environment for the NBN—what will be the rules and regulations. Indeed, one of the witnesses, Mr Michael Malone from iiNet, the country’s third-largest internet service provider, indicated words to the effect that the uncertainty is so great that nobody actually wants to build this and that that was in fact the only thing that the proponents and the stakeholders in the industry could agree upon—no-one actually wants to build this thing. Again, the conclusion we found difficult not to draw from the evidence provided was that those who end up tendering are actually doing it to make sure that no other guy, no other company, gets to build the thing—to keep the others out rather than a genuine desire to build—which is potentially fundamentally undermining the real importance of delivering on this promise to the Australian public.

The committee considered concerns about the time frame for the delivery of the promise and, given the shortcomings in delivering the promise, whether there was a view amongst stakeholders that the time frame for delivering it should be extended. Mr Michael Malone from iiNet essentially said that he would prefer a deferred solution over a stupid solution—and at the moment this is looking like a stupid solution.

As a senator for South Australia, I am particularly concerned to understand what the government is promising in terms of providing access to the underserved or not served at all percentages of the South Australia population. Evidence was provided to the committee by the South Australian government about the fact that almost three-quarters of South Australia’s population reside in metropolitan Adelaide but that South Australia differs from other states in that it has only two regional centres with more than 20,000 people. This clearly has consequences in terms of the ability for a successful tenderer to be able to deliver upgraded national broadband network services to users in those areas. The South Australian government went on to indicate that, in some regional areas in South Australia, the proportion of the population that cannot access broadband at all is as high as 33 per cent. Particularly coming from the South Australian perspective, I am concerned to hear evidence from witnesses and stakeholders about their concerns about the ability of the successful tenderer to deliver this promise—even though we are not quite sure what the promise is and even though it may well end up that the government defines what 98 per cent of the population is to suit the bids received during the tender process rather than on any other empirical and evidence based basis.

Further concerns were highlighted effectively by the minister in question time today, such as his inability to guarantee that, through the national broadband network process, Australian broadband users would not effectively be paying more for the same services they enjoy today. Indeed, during the committee process we heard evidence from some that to some extent it is possible that better services than are provided today could be provided through the process, but they are so much better that no-one will actually want them or need them. And, by the way, they will cost more. The minister today could not guarantee that Australians would not, under the national broadband network, pay more than they currently pay for the same or equivalent services. That is an indictment on the process thus far. The committee looks forward to continuing its considerations so that we can contribute to seeing to it that the Australian government delivers on this promise to Australian broadband users.

Kate Lundy (ACT, Australian Labor Party) Share this | Link to this | Hansard source

It is my pleasure to speak to this interim report and particularly to advise the Senate that government senators did lodge a dissenting report from the majority report of the Senate Select Committee on the national broadband network. There were several reasons for this, not least of which was there were so many inconsistencies in the expression of the opposition senators in how they reflected on progress to date with the national broadband network. We have heard that this is an interim report and we know, thanks to the advice of the minister in the chamber, responding to questions during question time, that we are mid-process and that the government has in fact received bids that will now be considered by an expert panel. That notwithstanding, I think it is important to go through some of the contradictions and inconsistencies in the opposition senators’ position and then to reflect on some of the broader issues.

With respect to the opposition senators’ claim to support the need for broadband infrastructure investment in Australia, they have done everything possible to obstruct and undermine the government’s NBN process, including the advent of this committee in the first instance. Opposition senators who claim to want to see broadband infrastructure be speedily delivered to the Australian people, particularly, as we have heard today, to those areas underserved, their whole message is completely undermined by their calls for another full round of public consultation. Even today we heard the chair choose to quote witnesses supporting delays in the process in speaking to the report. I would like to refer specifically to clauses in the majority report. Clause 2.127 of the report notes:

The committee questions the appropriateness of the timeline for the evaluation of the RFP, believing it will not permit the necessary level of scrutiny by either the Expert Panel or the ACCC to select the successful proponent for the NBN.

Similarly, clause 3.99 of the opposition senators report states:

Firstly there is the criticism that the timeframe not only for the assessment of proposals, but for the legislative and parliamentary processes required to make the changes to the regulations and legislation, is inadequate.

Yet, clause 3.123 notes:

The committee believes that it is in the interest of the government, the industry and the Australian people to ensure that delays to the timeframe for the implementation of the NBN are kept to a minimum.

You cannot have it both ways. The opposition senators cannot sit on both sides of the fence. Do they want us to get a move on with this proposal—as we have made the commitment—and have a process in place, or do they want to specifically delay it? It is still unclear.

There is also acknowledgement that there are problems, serious problems, with the current regulatory regime. Clause 3.9 of the government senators’ report states:

Government Senators agree with the sentiment expressed in the Majority Report that the NBN provides an opportunity to address the failings of the current regulatory regime implemented by the former Government.

What this demonstrates is that there was broad acknowledgement—I think that is a fair comment by all senators on the committee—that there were failings with respect to the current regulatory regime and they did need to be rectified as part of this process.

Specifically, with respect to the requests for proposals, I would like to take the opposition senators to task about some incorrect information. The majority report is critical of RFP processes and often incorrectly states details of the RFP process. I would like to counter some of that misinformation and incorrect facts in the report. For example, the time frame for the ACCC is acceptable according to the ACCC; the RFP does ask proponents to indicate the extent to which proposals are able to prioritise areas that cannot currently access minimum speeds of 12 megabits per second; the government has taken into account migration issues in the RFP; and stated based solutions are allowed. It is not good enough to misstate the facts as they are, and, looking at the evidence that was received in the inquiry, I felt that it was important to correct the record.

Another major issue is that the process is specifically designed to maximise competitive tension—with six bids the government’s process is completely vindicated—and a lot of the criticism against the RFP would have applied to the previous government’s, the opposition’s, FTTN processes, for example, the regulatory settings definition of open access. Again, the criticism that the opposition is now trying to level at the government about the national broadband network processes could be applied to themselves in spades, because they had far less information available and a far less rigorous approach to the policy they placed on the table. That is not surprising when you consider that it comes after 11 years and 18 failed broadband plans, about which I know my colleague Senator Conroy has gone into great detail.

The majority report also takes time to try and justify the OPEL approach. OPEL, as we know, did not meet the terms of its contract, with 72 per cent of premises underserved. As I just mentioned, their approach to the FTTN network was very vague. Their FTTN proposal—and this is really important to hear when opposition senators are talking about the needs of underserved areas in rural and regional Australia—focused on metro and major regional areas. It had no speed requirement and did not service the whole of Australia.

The policy of the former government and now opposition was always to create a two-class system for telecommunications in this country, and there is nothing they can do to change the fact that their policy was completely inadequate in this regard. It shows that we are dealing with an opposition that has a spoiling plan, not a constructive plan to support Labor’s comprehensive proposal to get a national broadband network up and running. Labor has a process and it is a sound one. It has been run by a very rigorous process, as we know. Senator Conroy responds to questions about that proposal on a daily basis during sittings. I suspect that the coalition is feeling the frustration of not being able to thwart Labor in its worthy endeavour of building a national broadband network.

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise to speak in relation to the interim report of the Senate Select Committee on the National Broadband Network. I do so as the relevant shadow minister. I want to congratulate Senator Fisher, the committee and the secretariat of the committee for a very good and comprehensive interim report, and I look forward to the final report. The interim report is a very good examination of all the issues surrounding the quite extraordinary process involved in the national broadband network. I take the opportunity to thank my predecessor as shadow minister, Mr Bruce Billson MP, on his very persuasive advocacy of the need for this committee and his instrumental role in ensuring that the Senate set up this very good committee. I think this committee and the process surrounding it have put the spotlight on the Labor government’s policy and processes. That really is very much needed because this whole NBN process is shrouded in secrecy. I think the committee is proving to be very useful. It has been my pleasure to attend most of the hearings and to hear evidence from across the industry, from consumers, from internet service providers and from the major telcos in relation to this very significant matter.

For me, there are a number of things that really do stand out that are categorised and recorded in the committee’s report. The evidence that has been given before the committee really does expose that the Labor Party’s policy in this area is not much more than a glib one-liner that was presented to the Australian people at the time of the last election to essentially get Labor through the election. They had a very simplistic and quite cynical approach to the very complex issue of broadband services. There was virtually no detail presented to the Australian people and clearly little thought or analysis was done on how we can achieve the desired outcomes—outcomes which we all want but which cannot be achieved by glib one-line policies.

It is also clear that there is enormous criticism throughout the industry of the one-size-fits-all approach adopted by the Labor Party in its policy and, in government, its implementation. I think many would expect that, having got through the election, Labor would revisit this matter and adopt a more sophisticated approach. What the Labor Party has done that has been criticised by the industry is to simply pick a technology—in this case, fibre—and not focus on the outcomes that we all desire and how best to achieve them.

Despite the comments by Senator Lundy and Senator Conroy there is enormous criticism throughout Australia of the Labor Party’s cancellation of the OPEL contract and disbelief in relation to the assertions made that the OPEL consortium could not meet its contractual requirements. Certainly, Optus and Elders categorically reject the assertions by the minister that they could not achieve those outcomes. Indeed, while rural and regional Australia would have had a high-speed broadband service by July next year if that contract had been honoured, with the Labor Party’s NBN process it will be years and years before rural and regional Australians receive any improvement in their service.

The process of the Senate select committee has also identified significant criticism of the Labor Party’s tender process for its national broadband network. Principally, there was focused criticism of the absence of any declaration or guidance in relation to the legislation and regulations that will surround this proposed network. As many have said, the rules are being made up as we go along and will actually be a function of the process itself. Almost everybody who has appeared before the committee has said that the government should have determined the regulatory arrangements first and then everybody would know what they would be bidding towards.

There has also been enormous criticism about the lack of any detail as to exactly what is meant by the government in proclaiming its desire to service 98 per cent of Australian homes and businesses with this national broadband network. There has been no detail at all. People in my state of South Australia in particular fear that most of the state is going to miss out—that most of South Australia and Western Australia will be part of the two per cent that Labor has ignored in its policy.

There is a complete lack of detail about the extraordinary amount of money involved—the $4.7 billion of taxpayers’ money. The government said at the time of the election that that would be a 50 per cent equity injection. Immediately after the election, that became a possibility of debt—in other words, the government becoming banker to the tender process. It is also apparently open to the government to make this a direct subsidy and just hand over the $4.7 million. Who would know? It has been revealed that there has been no cost-benefit analysis done whatsoever on the extraordinary amount of money, $4.7 billion, that is going into a national broadband network. What benefits will the taxpayer get for the expenditure involved? This is by far the biggest expenditure out of the proposed Building Australia Fund. Every other expenditure out of that fund, we are assured by the government, will have rigorous cost-benefit analysis done. But this expenditure, by far the biggest of them all, will have no such analysis done whatsoever.

It is also becoming increasingly clear that voters were, frankly, deceived at the time of the last election about the timing of the implementation of this promise. Voters were promised that by the middle of this year the tenderer would have been selected—that promise has been broken. Electors were promised that construction would begin by the end of this year. The government has about 29 days to deliver on that promise and clearly that is going to be broken. The government has simply not factored in the processes and complexities of changing the legislative and regulatory arrangements surrounding internet services in this country. That is going to be an extremely difficult and time-consuming process and it is becoming increasingly clear that it will be towards the end of next year before we see any construction beginning on the national broadband network.

It is also quite interesting to note the absence of support for actually having a fibre-to-the-node network to cover 98 per cent of Australian homes and businesses. Nobody says that that is realistic, achievable or makes any sense. That is why the former coalition government’s OPEL contract based on wireless solutions in rural and regional Australia made enormous sense. No-one sees this proposal from Labor as the answer.

There seems to be a clear lack of understanding in the government about the impact on the existing industry structure. Upgrading the existing copper network to a fibre-to-the-node network is going to have a dramatic impact on this industry, particularly on internet service providers who will have millions and millions of dollars of equipment stranded at telephone exchanges. No thought seems to have been given to that consequence.

As Senator Fisher rightly pointed out, there seems to be a complete absence of any priority given to underserved areas in rural and regional Australia. There is growing concern about the consequences of the government’s remarkable policy of abolishing the Communications Fund, something which we remain opposed to. It is a fund that would have been there to provide funds to rural and regional Australians in perpetuity to ensure they get the best possible service. That is going to be swept away by the Labor Party and rendered obsolete. We have seen from this interim report and from the process the committee has undertaken how hopelessly mismanaged this whole process is.

Now we have this extraordinary process where the ACCC, over the Christmas and New Year period, will have six weeks to examine all the bids and determine the regulatory and legislative impacts. The panel is then expected to report, I think, on 24 January and give the government a recommendation. The public will have no knowledge of any of this as there is no commitment at all to put the ACCC’s report or the expert panel’s assessment of each of these bids into the public arena. The process is completely shrouded in secrecy. And now, with the government snubbing its nose at the Auditor-General and his finding that the RFP would have to be altered for the expert panel to be able to consider non-conforming bids, there must be real probity and legal doubts about the whole process itself.

I congratulate the committee and its secretariat; they have done great work. I look forward to the final report and, regrettably, I think it will be years and years before we see the final evolution of Labor’s ill-fated national broadband network.

Fiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Water Resources and Conservation) Share this | Link to this | Hansard source

As deputy chair of the committee, I rise to make some remarks on the interim report of the Senate Select Committee on the National Broadband Network. I will just make a few brief comments around some of the issues that arose during the course of the inquiry.

The first issue that was raised is the 98 per cent target for rolling fibre out across the country. There were some concerns as to how that figure was determined in the first instance. The issue of modelling was raised and how that 98 per cent will be measured. This is an issue that goes to the difference between whether the 98 per cent is going to be modelled geographically or is going to be based on population density. Because, using Queensland as an example, if they do the 98 per cent modelling on population we are going to have a significant land mass that is still not covered under the fibre plan just by dint of the nature of the population arrangements in that state. It was raised that the modelling had to be undertaken geographically to make sure that we are going to get those underserved and unserved areas.

Another area that was raised as an area of real concern was that open access arrangements should definitely be more clearly defined. The ability for competition was also an issue. Many people saw that the arrangements that would be in place would be a natural monopoly as a result of this process. It was raised that there should be a requirement of true and open access on the new network. The concerns were that it was not defined clearly enough. There were going to be some real issues around retaining competition under the new network framework if that open access was not very clearly defined.

Senator Minchin quite rightly raised the issue of the regulatory framework. There was a good deal of discussion around that framework and that it should have been put in place by government before the RFP process. The evidence brought to us in the inquiry was that bidders would have had a much clearer picture of what that regulatory framework was going to be if the government had moved to put that framework in place or had at least indicated very clearly what that regulatory framework was going to be before the RFP process took place. We have a situation where there have been a number of bidders who really do not know at this stage how those regulations are going to apply to their bid. This comes back to the issue of having the regulation in place to ensure that competition will be enabled in the event that the successful bidder—who will by all accounts have a natural monopoly—is ensuring that they will provide that access.

There were a number of concerns raised about the need for the ACCC to be given greater powers to ensure that that regulation could be enforced. We need to determine what those regulations are going to be. Given that they had not happened before this process commenced, we still need to get a very clear indication of how those regulations are going to operate. This goes to the very heart of ensuring that we have clear and precise access. There is also the issue of rolling in, not rolling out. I see this to be a very important issue. We need to ensure that the process. I seek leave to continue my remarks later.

Leave granted; debate adjourned.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Are there any other committee reports to be presented?