Senate debates

Monday, 21 March 2011

National Broadband Network Companies Bill 2010; Telecommunications Legislation Amendment (National Broadband Network Measures — Access Arrangements) Bill 2011

Second Reading

Debate resumed from 2 March, on motion by Senator Jacinta Collins:

That these bills be now read a second time.

10:02 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | | Hansard source

As the first speaker on a Monday morning in this place it would usually be a pleasure to rise and say, ‘It is a pleasure to speak on this legislation.’ Unfortunately, however, this is flawed legislation designed to pursue and implement a bad policy. It is not a pleasure to do so, because it is disappointing to once again be in this place debating a matter in which the government is attempting to spend billions upon billions of taxpayer dollars. By doing so, this government will plunge this nation further into debt and it will create a giant new taxpayer funded monopoly on the basis of its belief that this is the only way to provide faster broadband services for Australians when there are in fact many other ways.

I speak, of course, of the National Broadband Network and the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011. For the NBN, as it has become known, to be built it will require around $27 billion in equity funding from the Commonwealth government. The NBN Co. will need to borrow a further $10 billion to roll out the network. In addition, the NBN Co. is currently in a much-delayed negotiation with Telstra over a further deal for access to Telstra equipment and a transfer of infrastructure that is worth around $11 billion. All up, this is about a $50 billion venture that the government is involved in.

It is worth the chamber reflecting on that for just a moment—$50 billion. This will all be funded, one way or another, by debt through the $27 billion that the government will be borrowing—because it is already in debt and deficit—to pump equity into the NBN and it will be a debt that every Australian family and taxpayer will directly owe. The NBN Co. will raise $10 billion by borrowing from the equity market. It is not seeking equity investments and it is not seeking investors—it will simply borrow $10 billion from the financial markets. That will be debt that a 100 per cent government owned company will owe. The funds provided to Telstra will overwhelmingly need to be borrowed—whether it is $11 billion, $12 billion or $13 billion. We do not know the nature of that arrangement with Telstra, but what we do know is that that money will need to be borrowed by NBN Co. for it to be able to pay Telstra.

Basically, what we have here is a $50 billion debt package from this government to roll out fibre across the country in the fictitious belief that this is the only way it can get reasonable broadband services to all Australians. Let me state again, as I have stated in this chamber many times before, and as Mr Turnbull, Mr Abbott and others have stated, that the coalition believes that it should be a government priority to ensure that all Australians have access to fast, affordable and reliable broadband services.

The truth is that many Australians already do have those services. This government is going to spend billions of dollars duplicating services and infrastructure that are already there, and rolling it out to people and places that already enjoy faster broadband, rather than focusing its efforts in the areas of market failure and ensuring that it spends taxpayers’ money wisely in the places where fast broadband does not currently reach and probably will never reach on a commercial basis. That is where there is room for government investment—targeted, careful government investment focused on the people who might otherwise miss out. But no—this government sees the need to do the whole lot itself in this massive wasteful exercise. This is why it is a disappointment to speak on this legislation this morning because we will see tens of billions of dollars of debt unnecessarily borrowed and spent to build something that could be done in a properly regulated private infrastructure investment arrangement.

I will turn to these two bills that are before us today. The National Broadband Network Companies Bill 2010 governs the ownership, operations and legal status of the NBN Co.—the Commonwealth owned builder and operator of this broadband network. It limits NBN Co. to business activities directly related to supplying wholesale communications services—or, at least, that is what the government claims. I will shortly turn to some of those claims that highlight the flaws evident in this bill. It also sets out some of the conditions for the possible privatisation of this network. I will also turn to some of those issues shortly.

The Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011 amends the Competition and Consumer Act 2010 and the Telecommunications Act 1997. It requires NBN Co. to provide open and non-discriminatory access to retail carriers using its wholesale services and imposes access rules on NBN Co. and NBN-compatible technical requirements on non-NBN fibre rollouts. Once again, I will turn to some of those issues where the coalition has particular concerns with this legislation.

I say that it is flawed because the legislation does not deliver what the government promises—far from it. The government proclaims that this will be a wholesale only network, yet it leaves scope for mission creep in the NBN’s activities. It leaves scope for the NBN Co. to start to provide retail services in a number of different ways. The government claims that this will be set up in a manner to be privatised at a later stage and yet has agreed, in a deal with the Australian Greens, to put so many provisions and hurdles in the way of that privatisation that there really is a question as to whether it will be able to reasonably be privatised.

Let me go through some of the particular concerns that the coalition has with this package of legislation. Firstly, we are concerned that this bill will prevent appropriate parliamentary and public scrutiny and oversight of the NBN Co. This is the largest public works project in Australia’s history. As I said, it is a $50 billion project, with the overwhelming majority of that $50 billion being borrowed money. The government has already rejected calls for a decent cost-benefit analysis of this project either by Infrastructure Australia or by the Productivity Commission. The government chose to release only 160 pages of the 400-page NBN Co. business plan. The government asked MPs who were briefed to sign confidentiality agreements. The government has been incredibly secretive about the details surrounding this project and incredibly reluctant to submit it to any type of decent scrutiny or oversight.

Now we have this bill which seeks to have the NBN Co. defined as a corporate body rather than as a public authority, thereby exempting it from FOI laws. This is despite the fact that the NBN will be for the foreseeable future—for the length of time that probably any of us are likely to be in this place—a 100 per cent government owned entity. Unfortunately, the recommendation in the Senate committee’s report and the amendment proposed by the Australian Greens has the effect of making the NBN completely immune in practical terms from the Freedom of Information Act. The amendment proposed by the Australian Greens, which we understand the government has persuaded them to put up, has the effect of making exempt all documents of the NBN that can be described as being in relation to its commercial activities. Quite clearly, basically everything that the NBN does could be defined as being in relation to its commercial activities. The NBN is meant to be a commercial entity, so you would expect all of its operations to in some way, shape or form be commercial activities. That would therefore mean that everything could potentially be exempt under the definition from the Greens.

We believe that this parliament, the public and the fourth estate should have proper oversight of this NBN. We will seek to ensure that, just as schemes such as the Snowy Mountains scheme—which Senator Conroy so often likes to cite in relation to prior infrastructure projects—had decent parliamentary oversight, this one should as well. The Parliamentary Standing Committee on Public Works should be entitled to have oversight of the NBN and should not be prevented from having that oversight. We seek to ensure that freedom of information requests are reasonably dealt with in a manner that allows the public, the Fourth Estate and the parliament reasonable access to ensure that the operations and activities of NBN Co. are undertaken in a proper way in accordance with what the government claims will be the case. We also have concerns about how this legislation may hurt private retail service providers by allowing the NBN Co. to extend its mandate. This is the issue of mission creep that I spoke of earlier.

The government has repeatedly attempted to assure the parliament, the public, the media, telco carriers and the market generally that the NBN would provide only a wholesale layer 2 bitstream service to retail service providers and that it would not deal directly with end customers. But the restrictions placed on NBN Co. in these bills are unclear in some places and unduly expansive in others. For instance, NBN Co. will be able to supply network services directly to gas, water and electricity utilities, transport operators and road authorities even though the provision of such services to these entities is an existing and valuable business opportunity for Telstra, Optus and other Australian carriers. The bill does not specify in clear language that NBN Co. must limit its products to layer 2 service supply to retail service providers for the purpose of providing services to end users. The bill even makes it possible and easy for people beyond these utilities, should they manage to meet these relatively easy definitions of carriage service providers to directly purchase their services from NBN Co. as well.

We will challenge the government in the committee stage to live up to its promise that this is a wholesale-only network and to support amendments that will ensure: that this network can only provide services of a wholesale nature to retail service providers that can then be onsold to customers; that the NBN Co. should not have direct retail relationships with customers; and, further, that the NBN Co. should be limited, as the government has made clear, to the provision of layer 2 bitstream services. This is a very important technical point: to allow the NBN to move up the product chain and engage in that type of mission creep would be to allow the NBN to get into some of the most profitable areas of the retail market. The NBN, if it is to be a truly wholesale carrier, needs to operate purely and entirely at this layer 2 bitstream service in providing services; otherwise, it has the capacity to start to undercut the profitability of retail service providers.

Let me be quite blunt in relation to this space. We want to make sure that this NBN and this structure do not repeat any of the mistakes of the past. This parliament has already dealt with the structural separation issues around Telstra. That legislation was debated at the end of last year. If we go back over that debate, both sides of parliament should acknowledge that some of the issues around Telstra’s structure were mishandled in its transition from a government entity through its corporatisation to its ultimate privatisation. There were opportunities under governments of both persuasions to fix the problem, but that was not done. We do not want to see those mistakes repeated in this process. We will hold the government to what it claims will be the case: actually having a wholesale-only provider of the basic service and allowing the retail market to go and do what it does best, which is to provide competitive, innovative services and to be in charge of the development of new, innovative product. To do that, you need the NBN Co. providing a basic flat service to all of them.

We are also concerned that this bill will prevent competition in that space by preventing private competitors entering the market. The so-called level playing field, or cherry picker, provisions of these bills will mean that any company building a new network offering services of 25 megabits per second or higher will have to meet the same technical standards as NBN Co., make available the same basic layer 2 wholesale services as NBN Co. is meant to be making available and allow competitors non-discriminatory access to their networks at prices set by the ACCC. Mandating prices and reducing returns will of course prevent private investment in new networks that could otherwise lead to many Australians getting faster broadband much sooner than if they were to wait for the NBN. It will stifle innovation in the telecommunication sector by mandating which technologies must be used.

It is important to note in these concerns that it is not a case of saying that the NBN should not be rolled out in some places but is simply indicating that the coalition has concerns about preventing competitor companies from rolling out services in places. Canberra is a case in point. The Senate committee inquiry heard very compelling evidence from service providers in Canberra, who provide direct services already from the fibre services that are rolled out, that they will be threatened by this legislation. Their profitability will be threatened. They themselves will have to undertake major structural changes to be able to continue to operate if this legislation passes. We do not think it is reasonable to stifle private operators who in the past have provided decent services to the community and private operators who seek in the future to provide better competitive services to the community. Those operators should be entitled and enabled to get on with doing what they do best, and that is providing good, efficient and competitive services.

We are also concerned, as I flagged earlier, that this bill will make it harder to sell off the NBN. Initially, of course, this was going to be a 50 per cent private owned company. That was the government’s first approach. When they realised that no private operator was ever going to invest in it, it became a 100 per cent government owned company with the belief that it would be sold off once it was finished. However, subsequent backroom deals with the Australian Greens have seen significant barriers created for future privatisation. There is a real question as to whether the government even truly believe that it should become a private entity at any stage. We will pursue those concerns during the committee stage and seek to ensure that the limitations placed on future governments in dealing with this behemoth of an instrumentality are removed so future governments and future parliaments have the freedom and flexibility to do what needs to be done to fix this issue and to sell off parts of the NBN, if that is the best thing for the Australian public.

In closing, let me make it clear that the coalition believe this is a flawed policy and we have serious concerns about many aspects of these bills. I look forward to going through those concerns in detail in the committee stage. We will continue to vigorously argue that there is a better way than $50 billion taxpayer funded, debt funded investment in this sector to provide reasonable, fast, efficient, competitive broadband services to all Australians. Even though it is probably way too late, we once again urge the government to see common sense and to come onboard with a cheaper, more efficient and better way to do that.

10:22 am

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

Once again we see the opposition in their negative carping mode in this debate on the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011. They are not prepared to accept the proposition that NBN Co. will deliver massive change, massive improvements to productivity and massive benefits to the Australian community. Again we see—and I am surprised that Senator Birmingham is engaging in this—the misinformation that is coming out about cost. As a threshold issue, Senator Birmingham raised the issue of cost and then he finished with a $50 billion figure that he plucked out of the air because it sounds a bit scary.

The reality is that the cost of building the NBN without Telstra coming in as a partner was $43 billion. That was confirmed by McKinsey-KPMG in their implementation study. The government released that study in May 2010. It also indicated that, with NBN coming on board, the cost is $35.9 billion. This is a huge amount of money, but this is a huge project. It has huge potential and huge gains for the Australian economy.

Greenhill Caliburn, who evaluated the NBN corporate plan, found that the plan provided the government with a reasonable basis on which to make a commercial decision about NBN Co. So this is not some flight of fancy by the government; this is about us saying that this is the approach that will deliver the benefits to the community in relation to broadband across this country. What Greenhill Caliburn said is that the NBN Co.’s corporate plan has been completed to high professional standards, providing the level of detail and analytical framework that would be expected from a large listed public entity evaluating an investment opportunity of scale. It is an investment opportunity of scale that is providing opportunities for the whole country. Yet what do we get from the opposition—negative, carping criticism and nitpicking. They cannot bring the arguments to bear as to why this should not go ahead so they resort to carping criticism.

The two bills that we are dealing with, which are known in shorthand as the NBN Co. bill and the NBN access bill, are extremely important to allow this project to go ahead. We have heard the opposition and we have heard the issues that they are raising. In my view those issues are carping, negative, minor criticisms about whether there is a wholesale-only approach to the NBN—the argument that there would be mission creep. I have to say to you: I bet lots of people want the mission of the NBN to succeed, and if that mission can be as wide as possible in delivering decent NBN access to the community they would be quite happy that that creeps out across the community in a very quick, efficient and effective way.

In relation to the anti-cherry-picking proposals—again, typically from the opposition in their support of their big business mates, this time Telstra and Optus—they want them to be able to go in and carve out the best parts of the NBN, which would make it extremely expensive to have one wholesale price around the country. So it is typical: when big business get into the ear of the opposition, they just concede and they run big business’s line, and that is what Senator Birmingham has been doing this morning. I will come to the issue of volume discounting later. The issues of scrutiny and privatisation are, again, issues that are at the margins of delivering such a magnificent benefit to the people of Australia.

The government has established the NBN to address not only an industry failure but a longstanding market failure in this country. Senator Birmingham stands up here and says, ‘Well, we could do it some other way.’ I say: you had 11½ years to find another way to do this and you failed miserably, you failed completely and you failed terribly in providing any support for broadband across this country. What did that failure do? It left this country lagging against other advanced countries in the OECD and around the world—lagging behind broadband speeds, lagging behind the capacity to provide information in the community and information across business, lagging on productivity and efficiency. The coalition failed miserably across the whole economy. Not just on broadband but on productivity and efficiency, the coalition were complete failures. They were complete failures on providing the jobs of the future—the jobs that are important to position our economy and provide opportunities for future generations to engage. What do we get when the Labor Party and the government deal with this issue? We get negative, carping criticism. There has been failure from the opposition in the past on health, on education and on regional development. The evidence to the committee was that this will revolutionise health and education services across the country and provide fantastic opportunities for regional Australia. That is what the wholesale platform that is the NBN will provide to this country—opportunities for the future for business and opportunities for a better society.

We are ensuring that there will be effective retail competition, something that the coalition in 11½ years again failed to deliver. NBN Co. will operate on a wholesale-only, open and equivalent access basis. We understand the need for competition. We understand that that competition has to be at the retail level. That is what should be done. Because the coalition failed over 11½ years to deal with the wholesale aspect of the provision of broadband to the community, we have dealt with that. This bill provides the basis for delivering the NBN across the country.

The National Broadband Network Companies Bill 2011 limits the NBN Co. to a focus on wholesale-only telecommunications activities. It is clear in the bill. It sets out the Commonwealth ownership arrangements and provides for the eventual sale of the Commonwealth’s stake in the NBN once the NBN rollout is complete. It provides a thorough process, including parliamentary scrutiny, to deal with these issues. The bill works in tandem with the NBN access bill. The NBN access bill establishes a new access equivalency and transparency obligation for NBN Co. and it provides a level regulatory playing field for all operators providing superfast broadband services. The bill works in tandem with the NBN Companies Bill and the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill.

On 10 February this year, the Senate referred the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2010 to the Senate Environment and Communications Legislation Committee, which I chair, for inquiry and report. Our committee report was tabled last Thursday, 17 March. The committee advertised its inquiry and invited submissions from key industry players. We held public hearings in Canberra and in Sydney. We state in our report that submitters and witnesses were unanimous about the importance of the passage of the bills. There was not the negative, carping criticism that we get from the coalition but enthusiasm, support and appreciation for the fact that this government has done something that the coalition could not do in 11½ years in government: provide access to broadband right across the country.

The submitters and witnesses stressed the importance of broadband for business, health, education and research purposes, especially in the rural and regional areas. We heard from education and small business groups. The Group of 8, a coalition of leading Australian universities, described many possibilities for the NBN. They said:

High-speed broadband network provides the capacity for distant doctors or patients—or midwives for that matter—to have real-time interactions with specialist colleagues in an urban setting if they need it. … Broadband connectivity allows clinicians, wherever they are, to engage in things like grand rounds—when patients of interest are discussed in teaching hospitals, people who are not physically in that building can connect in real time and participate in the questions and answers …

There was no equivocation from the universities or from the professors of medicine in the universities. There was no carping criticism from them. They want this. They know that it is delivering. They know the opportunities that it will provide them with. They are desperate to get this. That is the difference between the people who stand to benefit from this and the coalition and their carping, negative approach.

Also, the inquiry heard from the Association of Catholic School Principals of New South Wales. I quote from them:

E-learning is truly already a reality in our schools. We have moved from paper to e-books to personalised learning and now to e-publishing in a relatively short time. Scalability is necessary to allow us to continue to grow, as I said, and to provide 21st century skills …

The NBN will provide that scalability. The NBN will provide an opportunity for our schools to grow. The NBN will provide an opportunity for our students to have access to the best tutors anywhere in this country—the best tutors anywhere in the world—on specific projects. The education professionals understand the importance of the NBN, even if the coalition do not.

The Council of Small Business Organisations of Australia talked about the greater bulk of small businesses wanting access to affordable high-speed broadband—for competitive reasons as much as anything else. They know the benefits that this will provide. They know that it is affordable. They know it is needed. They know it is necessary for the future of our economy and the future for our kids.

In their evidence, the ACTU said:

An NBN program which provides for universal access and a universal wholesale price, we say, would be the best method to ensure that Australians have equality of access to broadband technology.

And equality of access to broadband technology is so important. It should not just be for those that can afford the high prices that have predominated under the coalition. It should not be for those in big business who use broadband. It should be for everyone, because working-class kids in this country should have the same access as do the children of the privileged in this country. They should have access to telecommunications and broadband networks that provide them with the opportunity to use their skills, their intelligence and their capacity in an equal way to kids who have parents who can afford to buy that process now.

Notwithstanding the broad support for the bills—and it was very broad support—there were a number of concerns raised by some of the current telcos. Well, why wouldn’t they raise their concerns? They are vested interests that the coalition continue to pander to. I have to say that, when I heard Telstra waxing lyrical about the problems of a vertically integrated NBN, I thought to myself, ‘The hypocrisy of Telstra talking about vertical integration and lack of competition! The hypocrisy!’ Telstra are the organisation that the coalition built, with the Mexican gang up there running Telstra and telling the coalition what they would accept and what they would not accept—standing over the coalition when they were in government and telling them that they were not going to allow broadband access across the country. The coalition were stood over and done over by Telstra. We were not stood over, we were not done over, and we have stood up for the Australian public. We will not pander to the vested interests of Telstra, Optus or anyone else in relation to this process.

There are a number of issues detailed in the report, but they generally cover the wholesale obligations of NBN, including the wholesale supply exemptions for utilities. This is because NBN Co. is allowed to sell access to utilities for services that enable the utilities to monitor their own networks. As the minister said in the debate in the other place, the exemption is needed because, under the existing legislation, utilities may do things that would otherwise make them carriers or carriage service providers without being classified as carriers or carriage service providers. The bill simply allows NBN Co. to treat them as carriers or carriage service providers.

The exemption will also support the growth of smart infrastructure management, including smart management of electricity supply, and the exemption will put pressure on telcos to give utilities the services they need—the services that they did not get under the coalition, the services that were so-called spear carriers for competition. The coalition could never provide the competition. They could never provide the services to the utilities. The utilities have had an exemption for years because, under the coalition, they were incapable of providing the dynamism in the telecommunications sector that would provide those services to the utilities.

The committee supported the utilities exemption, noting that the utilities will still have the choice to purchase network management services from retail service providers or through other intermediaries. The challenge is out there now for Telstra and Optus to meet the commercial needs of the utilities. If they can meet the commercial needs of the utilities then the argument that the utilities should have access will disappear because it will be there based on market opportunities.

There were concerns raised about the definition of services that the NBN Co. can provide. We took the view that it is potentially problematic to define this sort of highly technical matter in primary legislation. Nevertheless, the government’s instructions to NBN Co. are extremely clear that the company will offer open and equivalent access to wholesale services at the lowest levels in the network stack necessary to promote efficient and effective retail competition via layer 2 bitstream services.

Concern was also raised by those opposite about the conditions for selling NBN Co. Under this legislation, the minister must declare that the NBN is built and fully operational. There has to be a report from the Productivity Commission. There has to be a parliamentary joint committee that examines the report, and the finance minister must determine that conditions are suitable for sale. I have to say that the conditions agreed to by the Senate provide a reasonable balance between flexibility for government and the NBN Co. and regulation in the public interest.

Another issue raised in submissions was concern that, under the proposed amendments, NBN Co. could offer volume discounts that would favour the largest service providers; however, a volume discount cannot be offered by NBN Co. unless it is in accordance with the arrangements set out in a special access undertaking which had been approved by the ACCC.

Part 3 of the bill relates to level-playing-field arrangements. The level-playing-field arrangements are intended to ensure that NBN Co. will remain commercially viable while meeting its stated objective of providing fixed-line fibre access to 93 per cent of Australian homes. Peak groups such as the Telecommunications Users Group and the Internet Society of Australia believe that the arrangements would be in the best interests of the end users and the NBN as a whole.

I conclude by saying that this legislation is important. This legislation is about dragging us into the 21st century. This legislation is about dealing with the incapacity of the previous government to deliver national broadband services across this country.

10:43 am

Photo of Mary FisherMary Fisher (SA, Liberal Party) Share this | | Hansard source

Loath as I am to start by stating a negative, I feel compelled to do so. We in the coalition are not broadband deniers but we are NBN sceptics. There is a big difference. We in the coalition want all Australians to have access to faster, cheaper and reliable broadband but we have no faith at all in the government’s ability to achieve that through the NBN. So, yes—we are NBN sceptics and properly so.

Our concerns about the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011 revolve around the way in which they undercut the government’s repeated reassurances about the NBN: firstly, that the NBN will be subject to examination, scrutiny and transparency; and secondly, that NBN Co. will deliver wholesale-only services and will not compete in the retail market. There are several aspects of these bills that directly undermine each of those repeated reassurances given by this government. I will focus on a couple of those aspects this morning.

The exemption—which others have mentioned—that it is proposed be given to utilities would allow utilities like gas and electricity service providers to access services directly from NBN Co. That exemption effectively would allow NBN Co. to step into what could otherwise be the shoes of retailers who would then provide those services on to utilities. In seeking this exemption, the utilities are seeking an exemption for the use of broadband for their own internal purposes. To justify the exemption, they use arguments such as: ‘We provide essential services, we are different and we do not need anyone else—for example, retail service providers—to add anything to or change anything from the sort of service that we can get direct from NBN Co.’ That is very well and good, but wouldn’t everyone like to have that sort of access without the necessity to have a retail service provider in the middle?

Little debate has been had about the fact that this exemption would not only apply to government owned utilities; it would also allow privatised utilities to access broadband directly from NBN Co. The arguments from the utilities, whilst very well intended on behalf of their members, are pretty much not more than: ‘We are special, we are different, we provide services upon which you rely very much and you would not like to do without us at any point in time.’ I am afraid the arguments are not much more sophisticated than that.

The consequences of granting the exemption would be that NBN Co. would be allowed to stand in the shoes of a would-be retail service provider. The Energy Networks Association, a peak body representing utilities, particularly in gas and electricity, has spoken of its doubt that retail service providers would be able to provide the sort of stuff that the energy networks need for their own internal broadband consumption. However, that was hotly contested at the inquiry to which Senator Cameron referred, by witnesses who gave evidence to the inquiry that they would, effectively, love to bid for that space and they want to be given the opportunity to demonstrate that they can provide the services that the utilities would value. But the trouble with the bill and the exemptions as written is that they would deprive retail service providers of that opportunity. So you have NBN stepping into the shoes of what would otherwise be retailers, directly undermining the government’s repeated reassurances that NBN will be wholesale only and will not compete in the retail sector.

Interestingly enough, the Energy Networks Association, which Senator Cameron would no doubt have included in his conga line of supporters for NBN, in stating in its submission its opposition to coalition amendments to get rid of the exemption, listed the following as one of its three reasons for supporting the exemption:

The federal opposition’s proposed amendments—

to get rid of the exemption—

may have the effect of deterring energy network businesses from using the National Broadband Network.

How does that define Energy Networks Association as one of a conga line of supporters for NBN? What they are effectively saying is, ‘If you do not provide the NBN to us on the terms and conditions we want, we do not want it at all.’ Later in their submission they said:

While each energy network business will make its own decisions regarding the most cost-effective and technically feasible communications technology for their requirements and circumstances, the NBN is an important candidate technology being considered by many energy businesses.

So, even if the exemption is granted, these guys are not even sure that they will want to use it. At the very best, they are saying: ‘Yes, we might use it if you give it to us on the terms and conditions that we want. But if you don’t give it to us on the terms and conditions that we want—in other words, if you don’t grant the exemption we want—then we probably won’t use the NBN at all.’ How is that support for a $43 billion taxpayer investment? It sounds pretty much like, ‘We’ll tolerate it if we have to,’ at best.

Another aspect of these bills which undermines the government’s repeated reassurances that the NBN will be transparent and that the NBN will be wholesale only and will not compete with the retail market is the proposal in these bills to give licences to carriage service providers. Witnesses to our Senate inquiry properly pointed out that there is nothing in the terms and conditions attached to being a carriage service provider that compels a body so licensed to on-sell those services to the public. Putting it another way, that means that there is nothing that forces a licensed carriage service provider to become a retailer, if you like, and to on-sell. That leaves open the door for a body to obtain a licence as a carriage service provider and access services from NBN Co. directly for its own internal use. Once again, if that were to eventuate it would mean that NBN Co. would be standing in the stead of other retail service providers. NBN Co. would be going way beyond being wholesale only and would be competing in the retail market, a second very clear breach of the government’s repeated reassurances that NBN will be wholesale only and will not compete with the retail market.

As to transparency, the provisions in the bill that we are supposed to believe will allow eventually privatisation of the NBN Co. and the NBN are so onerous as to say loudly and clearly—in capital letters written in lemon juice between the lines of the legislation; you just have to iron it and it will come out in brown—that the NBN will never be sold. The NBN cannot be privatised unless and until the relevant minister, whomever that may be, declares that the NBN is complete—how long is a piece of string; how long is this fibre going to be?—and fully operational. It requires the minister of the day to declare that the NBN is complete and fully operational. It also requires the finance minister to declare that the market conditions are suitable. Like I said, it is written in lemon juice. Just iron it and you will find that the NBN under this government is destined to never be sold. Why don’t they just fess up?

This government has the hypocrisy to suggest that if the NBN ever is privatised then it should properly be subject to a Productivity Commission review—finally; at last. It will probably never be realised under this government, because the NBN will not be privatised. But, if it were to be, they are saying that they might then, and only then, allow a Productivity Commission review—finally, some scrutiny. What hypocrisy from the government while it continues to evade pretty much any decent level of scrutiny. The NBN Co. CEO, Mike Quigley, has protested. He reckons that he has scrutiny enough, thanks very much. He told the Financial Review that he does not want every man and his dog having a look at the internals of his operation. It is not his operation; it is the operation of the Australian taxpayers and it deserves to be subject to the sort of scrutiny that every government owned enterprise is subject to.

Hence also our amendments in respect of the freedom of information laws, to ensure that the pup that this Labor government has sold the Greens in terms of so-called freedom of information reassurances is not realised, because that pup will turn into a dog and it will not result in any sort of freedom of information access to NBN Co. As my colleague Senator Birmingham has said, what activity of NBN Co. will not be deemed to be commercial in that environment? So much for transparency.

Transparency could have been made possible earlier by subjecting this expenditure of taxpayers’ money to scrutiny by the Public Works Committee. This Labor government, instead of debating its proposed exemption through the House of Representatives and achieving exemption that way—if the House of Representatives so decided—ran to its friend the Governor-General. The Governor General is, as I understand it, able to provide exemption to scrutiny from the Public Works Committee on prescribed bases which include, in a subsection of the Public Works Committee Act, where the Governor-General is satisfied that an authority of the Commonwealth is engaging in trading or other activities or is providing services in competition with other bodies. It goes on to say that the Governor-General may make regulations declaring that the act does not apply to that authority.

Of course, that is what the Governor-General went on to do. Why did she go on to do it? The explanatory statement attached to the message that went to the Governor-General from the government when they wanted to go in a way that did not subject their proposed exemption from the Public Works Committee to proper debate—for example, in the House of Representatives—claimed: ‘NBN Co. is trading and providing services in competition with privately owned telecommunications firms, including competing in the fixed-fibre broadband sector throughout Australia as a wholesale-only open access network provider.’

Propped up by the provisions of this bill, you have a government owned monopoly proposed to benefit from anti-cherry-picking provisions which would legislate out any prospective competition whatsoever to NBN Co. The anti-cherry-picking provisions would legislate away any possible competition from so-called privately owned telecommunications firms. How can this government stand up in front of the Australian people and seriously claim that NBN Co. is going to be providing services in competition with the private sector competing in fixed-fibre broadband as a wholesale-only open access network provider? Come on. The Australian taxpayer is stumping up for NBN and NBN Co., and NBN and NBN Co. are given legislative fiat to ride roughshod over any other competitor, dare they even think about it. These two bills make a mockery of the basis on which the government ran cap in hand to the Governor-General to seek—and subsequently be granted—exemption from scrutiny by the Public Works Committee. That exemption ought be reconsidered and it ought be seen as the hypocrisy from this government that it indeed is.

In concluding my contribution to the debate, I note with regret and deep concern the many aspects of these bills that undermine the government’s repeated reassurances that the NBN will be transparent, that it will be a wholesale-only service and will not compete with the retail sector. These bills do nothing to reinforce any of those promises. In fact, they shred them. On that note I will continue to fight for the coalition’s right to be NBN sceptics.

10:59 am

Photo of Anne McEwenAnne McEwen (SA, Australian Labor Party) Share this | | Hansard source

I rise today to contribute to this debate about the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill. Here we have another package of bills designed to bring about the establishment of Australia’s National Broadband Network. I am always pleased to have the opportunity to talk about the National Broadband Network, the NBN, because it is such an exciting initiative and it offers so much potential both in public policy and in economic development for Australia. It has been a long time in the hatching and this is just one set of legislation to bring about fruition of the NBN.

On 7 April 2009, the Labor government announced that it would establish a company that would invest up to $36 billion over the next eight years to build and operate a wholesale-only, open-access National Broadband Network. From the outset the government said that it would introduce legislation that established governance, ownership and operating arrangements for the wholesale-only NBN company and for the access regime to facilitate open access to the NBN for retail-level telecommunication service providers. The two bills in debate today address those particular areas.

As we all know, or should know, the National Broadband Network is a fundamental nation-building reform. It will pave the way for Australia to move into the high-speed digital age. The Gillard Labor government is aiming to ensure that 93 per cent of all Australian premises will have access to high-speed, fibre based internet services for the benefit of businesses, communities and individuals. The remaining seven per cent of Australians premises will benefit from increased internet speeds by fixed wireless or satellite, depending on where they live. Once the rollout of the NBN is complete, Australian internet speeds will soar up to 100 megabits per second—some 50 times faster than most people experience today. It has been said many times in this chamber, and I am not shying away from saying it again, that the NBN and the high-speed internet technologies that it entails are the railways and highways of our time. The NBN project is the single largest nation-building infrastructure project in Australian history and the technologies have the potential to transform every aspect of our lives including business, health, education and government services, and it will serve Australia for the future.

The NBN will also increase national productivity and help us to build a stronger, modern, resilient economy. The two bills that are being discussed today are part of the crucial steps to make sure that Australia no longer relies on its ageing copper telecommunications network. It has been proven that as a result of our dated network, our broadband performance is severely falling behind in comparison with international standards and so the federal government wants to prepare Australia for the future. For that reason, we need to ensure that all of the bills associated with the NBN that are proposed by the government are passed through the Senate.

Individually, each of the bills in discussion today has significant purposes that will aid the rollout of the NBN.  The National Broadband Network Companies Bill 2011 contains provisions to ensure that NBN Co. operates on a wholesale-only basis. It establishes a regulatory framework for ownership, governance and operation of NBN Co. along with its subsidiary corporations. Additionally, the bill provides that the Australian government must retain full ownership of NBN Co. until its rollout is complete and it establishes the framework for the eventual sale of NBN Co. The National Broadband Network Companies Bill 2011 delivers a staged process to limit the activities of NBN corporations during the build phase and a staged process which will create transparency as NBN corporations move towards private ownership. Those processes involve considerable consultation and public enquiry—for example, by the Productivity Commission and the parliamentary joint committee on the ownership of NBN Co.

The companion of the companies bill is the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2010. While this bill contains three parts, the primary purpose of the second bill is to amend the Telecommunications Act 1997 and the Competition and Consumer Act 2010 to introduce new access, transparency and non-discrimination obligations relating to the supply of wholesale services by an NBN corporation.

As a member of the Senate Environment and Communications Legislation Committee, I have been part of many of the inquiries into the broadband legislation since the NBN project was initially launched by the Labor government. The report from the most recent inquiry, into the two bills that we are debating today, was tabled out of session last week. The bills were referred to the environment and communications legislation committee early in February. It has been an important of the process of rolling out the NBN that all of the legislation associated with it has been subject to scrutiny by the Senate committee. After advertising for submissions, 24 were received, and subsequently the committee held public hearings in Sydney and Canberra to hear from witnesses.

Submitters and witnesses to the inquiry were unanimous about the importance of the passage of these bills through the Senate. The importance of high-speed broadband for business, health, education and research purposes, particularly in rural and regional areas, was stressed in the majority of submissions and the committee was able to take evidence from witnesses along those lines. For example, witnesses Professor Stanton and Professor Griffiths from the Group of Eight, a coalition of leading Australian universities, highlighted the importance of broadband for health services and health research. I quote them:

High-speed broadband network provides the capacity for distant doctors or patients—or midwives for that matter—to have real-time interactions with specialist colleagues in an urban setting if they need it ...

I can imagine how that will improve the delivery of health services to Australians who live in more remote communities. Professors Stanton and Griffiths continued by saying:

Broadband connectivity allows clinicians, wherever they are, to engage in things like grand rounds—when patients of interest are discussed in teaching hospitals, people who are not physically in that building can connect in real time and participate in the questions and answers.

In regard to medical research, the professors said that superfast broadband would speed up trials and research immensely. Again I quote them: They said, in respect of medical research:

... it can take years to get thousands of people in a normal randomised control trial. We can do online automated randomised control trials with people in their houses in a few months.

That is an exciting opportunity in the area of medical research that would otherwise be unavailable to Australian medical researchers—one that the federal opposition appears to wish to deny to researchers and, indeed, people throughout Australia who could participate not only in the research itself but in the benefits of that research.

As I already mentioned, superfast broadband services are going to help a multitude of sectors. Mr Strong, from the Council of Small Business Organisations of Australia, noted the many opportunities which broadband brings to small businesses. I quote him:

“There are 2.4 million small businesses—

in Australia.

They are diverse, but I think I can say with confidence that the greater bulk of them want—

access to affordable and high-speed broadband—

for competitive reasons as much as anything.

Mr Strong also advocated for those who run their businesses from regional areas and said that broadband would change the way they work entirely. I quote Mr Strong again:

“Women on farms ... I have seen a few of them use the internet quite well to sell products ... and I know one young man is manufacturing and selling golf clubs online and doing quite a good job of it.”

Would we want to deny the innovative small business people out there in our community, particularly those in regional and rural areas, who will be able to benefit from the better access to high-speed broadband that the National Broadband Network could give them? I do not think any Australians would want to do that, but apparently there are some Australians in the Senate chamber that do. An affordable, superfast broadband connection would help all small businesses, particularly those who rely heavily on the internet, to stay abreast of their markets.

Further submissions and witness statements to the inquiry continued to reiterate the importance of high-speed broadband across all sectors. In relation to the benefits that the NBN will have on the education sector, Ms Saab, from the Association of Catholic School Principals in NSW, stated:

E-learning is truly already a reality in our schools. We have moved from paper to e-books to personalised learning and now to e-publishing in a relatively short time. Scalability is necessary to allow us to continue to grow, as I said, and to provide 21st century skills ...

Ms Saab continued:

Our school cannot meet the needs of the 21st century learner with 20th century infrastructure. Hence, the broadband is so important to us. Students are, as we know, the very greatest asset we have. The children of Australia, we believe, deserve an education that enables them to be global citizens of the 21st century. The 21st century classroom is currently grinding to a 20th century halt without fast reliable access to the internet.

Ms Saab has encapsulated in those comments exactly what the National Broadband Network will bring to our education sector.

Finally, in quoting witnesses at the inquiry conducted by the Senate Environment and Communications Legislation Committee, I note that the ACTU in its appearance at one of the hearings stressed that the NBN would help bridge the gap in access to the internet. The ACTU said:

… if you examine the current take-up rates of access to broadband, it falls as the income of your family falls. In other words, low-income families or people on ordinary incomes were much less likely to have a home broadband connection than people who are more well off. In our view, that is an unsustainable outcome and not an outcome which promotes social utility. An NBN program which provides for universal access and a universal wholesale price, we say, would be the best method to ensure that Australians have equality of access to broadband technology.

In those comments from the ACTU we can see that the NBN is a classic Labor government initiative, because it is directed entirely at ensuring inclusion across the community and ensuring that people who are not doing so well have access to the technologies that will enable them to participate in the community and in all aspects of community life in the same way that those of us who are somewhat better off are able to do. It is a social initiative as much as it is an economic initiative, and it is one that the Senate should stand behind.

After looking at both the companies bill and the access bill in depth and listening to submitters and witnesses, the committee recommended that both bills be passed. The committee also recommended, however, that the passing of the bills be subject to an amendment passed through the House of Representatives regarding the application of the Freedom of Information Act to NBN Co. for the access bill. The federal Labor government wants to make certain that the NBN will be for the benefit of all Australians. In fact, when an exposure draft of the companies bill was released for public comment in February 2010, some concerns were raised about certain aspects of the bill. In response to those concerns, the government has made significant changes to the bill from the initial draft—for instance, by strengthening the status of NBN Co. as a wholesale-only business. The government is taking great pains to make sure the community understands what is being included in these bills and has an opportunity to comment on them.

The foundations and rollout of the NBN have already begun in various places across the country. My Tasmanian colleagues would be the first to tell you that the first services provided over the NBN were launched in their home state in August last year. I am pleased to say that, in my own state of South Australia, Willunga has been selected to be one of the first release sites for the NBN. The people of Willunga are very happy about being included as a first release site. Residents of Willunga overwhelmingly embraced the rollout of the test network, with 84 per cent signing up for the optic fibre connection, after years of putting up with inadequate and ineffective internet speeds, which was all the previous Liberal government could provide them. We know that two more South Australian suburbs, Modbury and Prospect, will be included in the rollout of the next 19 mainland sites. We look forward to seeing the benefits to those communities in South Australia.

There has been considerable legislation already passed in regard to the rollout of the National Broadband Network, and one of the most significant achievements for the government so far in this regard which will ensure that this delivers competition to the telecommunications sector in Australia was the passage of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill in 2010. That was a very significant day in Australia’s telecommunications history because, of course, passing that part of the legislation was integral to separation of the wholesale and retail arms of Telstra and paved the way for the overall integration of the NBN. It was a step in the government’s plan to deliver the NBN which we promised in the 2007 federal election. Our promise then was to partner with the private sector to deliver a national broadband network and in particular to ensure competition in the sector through an open access network that provided equivalence of access charges and scope for access seekers to differentiate their product offerings. As I said before, these two bills today are part of making that promise to the Australian people a reality.

I am very proud to be a supporter of the National Broadband Network. As I said before, it is a real point of difference between the Labor government and the coalition opposition in having a vision for the future of Australia, ensuring all Australians have equal access to this incredibly important initiative and ensuring that we take advantage of the opportunities that modern telecommunications will provide to a very big country like Australia in the delivery of education services, health services, economic development and competition between small businesses.

It is disappointing that this week, another week in the federal parliament, has started with the coalition again carping, whingeing and nay-saying about important public policy initiatives being rolled out by the Labor government. But that is what we have come to expect from the coalition, because they have no comprehensive plan at all for dealing with Australia’s future telecommunications needs. Every time we have a piece of legislation to do with the National Broadband Network we get coalition senators on the other side of the Senate chamber trying to knock it, trying to set us back, trying to keep all Australians back in the 20th century and trying to again fluff up the carrier pigeons that they keep over there because they think that that is the way forward.

Thank goodness there is a Labor government. Thank goodness there is a Labor government that is absolutely committed to rolling out the best possible telecommunications infrastructure for Australia. We welcome scrutiny of our legislation, whether by a Senate committee, by the Australian Competition and Consumer Commission or by the Joint Committee on the National Broadband Network. We welcome scrutiny and we will participate with the Australian community to ensure that the best possible telecommunications infrastructure for the future is rolled out by the government.

11:18 am

Photo of Scott LudlamScott Ludlam (WA, Australian Greens) Share this | | Hansard source

I am pleased to rise and speak on the National Broadband Network Companies Bill 2010 and related bill this morning. It is nice to be speaking about something positive. I cannot unconditionally declare Australian Greens support for these bills, because this is very much a work in progress. I understand there are a certain number of government amendments that have not yet been circulated, which I think are designed to address some of the concerns that the committee had—but, because we have not yet seen those amendments, it is very difficult to pass judgment on them. So I am going to keep my comments fairly general.

This debate has been several years in the pipeline. What we are hoping is that this debate will close the long and drawn-out preliminary phase of the rollout of the National Broadband Network. If the parliament ends up supporting these bills, I think it is safe to say we will be in new territory. As the construction schedule ramps up, and the network begins to light up around the country, I am strongly hoping that two things will happen. Firstly, the new joint committee will be investigating how well the predictions in the NBN business plan actually map onto reality. Up until now we have been discussing a hypothetical infrastructure project, a broadband network that existed only on paper. That of course is beginning to change. Anyone who spent any time at all going through the business plan will have noted the extraordinary scale-up and size of the workforce in the middle and the later years of the rollout implicit in the concept of taking this project past 93 per cent of premises in the country.

Passing these bills, if the parliament does so, will put us onto the on-ramp. And now, of course, it is incumbent on the parliament to hold this government to its word, remembering the old adage that no battle plan survives contact with the enemy—or, in this case, with reality. I think the joint committee will be an important part of that accountability process, and I congratulate Senator Xenophon for putting that idea forward as part of his agreement with the government late last year. I look forward to working with the new chair, Mr Oakeshott, and the rest of the committee members as that work gets underway.

I think the second thing that will happen is that the debate will shift from questions of competition policy and disputes over competing commercial self-interest to the uses to which Australians will actually put this network. That is the debate that I think most of us have really been looking forward to. With the rules of conduct settled, we get down to the really interesting question: what will the Australian people, businesses, educators, health professionals, environmental consultants, transport planners, energy utilities, artists, musicians and community broadcasters do with this technology? We have been joined this morning for the debate by a couple of classrooms full of students—good morning! This network is for these folk, and I am interested to know what young people will do with this technology, because it is something that we have simply not seen before in Australia. I will return to some of these questions at the end of my remarks, but I mention them here with a sense of anticipation because I think we are going to see remarkable things.

I would also like to note at this point that the release of the exposure draft was a good idea. I think that is generally good practice. We support that principle, and the government was able to deal with a lot of issues and concerns that the industry raised—and some quite significant concerns that the Greens raised. That means that most of what we are debating today is, while not quite at the margins, not quite the big-picture issues that have been dealt with.

I would like to deal with some of the specific issues, some of which Senator Birmingham raised in his speech. I know that there were some coalition amendments circulated to deal with some of these issues. As I said at the outset, I believe there are government amendments about to be circulated that will attempt to address some of the issues that I am going to canvass here, and that Senator Birmingham canvassed, but I will go through them in general and we will have to wait until the committee stage to see what the government has come up with.

We support in principle the provisions of the bill in relation to cherry picking, with some reservations. The economics of the National Broadband Network are premised on the principle of cross-subsidisation, and that has underpinned public works in Australia from the beginning—for the last century or so, really—whether it be water, gas, roads, electricity or postal services. And despite attempts to roll back this principle, we are strongly supportive on grounds of equity. Basic services and utility services should be the same cost whether you live in Wentworth or Wiluna. That is something that markets, and sometimes governments for that matter, are not always capable of or interested in providing. The government’s intention here, we understand, is to use the easy markets to subsidise the hard ones which private companies would not find profitable. We saw with the HFC rollout that we had two competing telecommunications carriers rolling parallel networks down parallel streets in the lucrative parts of the country while ignoring everywhere else. That is the kind of infrastructure provision that we are not interested in providing here. I have found a few hardline ideologues on the far Right who object to this interference in their ethereal free market, but most people seem to accept the idea of using cross-subsidisation to push metro quality services well out into regional areas. This of course gives rise to some very hard questions about how to treat market participants who turn up in future to overbuild the NBN in lucrative inner-city areas without taking on the public interest obligation of providing services in unprofitable markets in the bush. This is a network for everybody, and we agree with that. Our view on this matter is in alignment with the government: it should be prevented unless certain, very strict conditions are met.

Telstra has proposed amendments repealing the cherry-picking provisions entirely, in an irony that the Senate Environment and Communications Legislation Committee found quite entertaining—and it is perhaps the strongest confirmation we have had yet that the provisions should stay just as they are. Reservations, though, are that players like PIPE Networks and TransACT were not trying to cherry pick, and I do not think the government intended to catch them. These are people who were here already; they were trying to run businesses well before this new network came along. The government is proposing exemption criteria which will condition the way in which the cherry-picking provisions apply. This is one of those areas where, at the moment, we do not have any indication of what those are—we will have to wait and see whether that is going to work.

The committee spent quite a bit of time discussing the issue of discrimination, volume discounts and efficiencies. This is a very serious issue because it threatens to undermine the whole point of the network or at least return us to the bad old days where a monopolistic incumbent favoured one provider over another with volume discounts. These deals always seem to end up favouring the large over the small and end up consolidating market power in fewer and fewer hands. At this stage I have to give the benefit of the doubt to the government and acknowledge that it was quite clearly not the government’s intention, but plenty of submitters raised it as an issue and we still do not have a solution or anything on the table to show that this will not occur.

Whether it comes to a committee stage amendment when we get around to debating this tomorrow, we are very keen that these matters be reported in detail every so often. The Greens introduced into the CCS bill we debated late last year provisions for a rolling review. We reserved the right to bring these issues back to parliament if the provisions are not working as intended. If it turns out that either volume discounts or other discounts are being applied unfairly and it is disadvantaging certain players in the market—generally speaking, from past experience they will be advantaging large players at the expense of smaller ones—then we want those things reviewed. We reserve the right to bring those provisions back to parliament if the market is dysfunctional and not working as the government intended.

I understand that the government certainly does not intend for that to be the case. We are looking for a monopoly provider at the wholesale level and as much competition as we can manage at the retail level. That seems to be the model the government is pursuing. But, if it does not work out that way, then we will not have too much time to fix it. That is going to need to be repaired.

The committee also spent a great deal of time considering the issue of scope creep, the expansion of the NBN Co. out of its wholesale box and into retail markets. The questions really are: who gets to buy layer 2 services, do they have to be a reseller, can they onsell it to others and can they use it for their own good? Although it is very evident that it is the government’s intention that layer 2 is the layer in the stack that NBN Co. will operate at, it is actually spelt out nowhere in the legislation. It is an assumption. It is another issue that many submitters raised.

From my point of view the committee hearings were quite useful in clarifying this issue. As you would expect, Telstra and Optus ran strong arguments objecting to any perceived scope creep. The thing is though that, if a utility needs the services from NBN direct, it should be able to get them. It is for the management of networks, whether they be electricity networks or water networks. I do not think anybody really believes that Water Corporation in WA and the electricity networks around the country plan to become telco resellers. We are reasonably confident that allowing utilities to buy these services for the provision of network management services only maintains the integrity we are seeking to keep.

Selling to anybody with a carrier licence probably is a little more complicated, but if a retail service provider or Telstra or Optus want to bid against the NBN Co. in the utility business to provide that service because they think they can value-add and provide justification for their mark-up and for being there, they should be absolutely entitled to do so. With the drafting of the bills at the moment they can do that. They are not prevented from competing. It is just that NBN Co., if the utilities want them there, will be in that space.

The same goes for an entity with a carrier licence intending to buy these services for their own internal use. If a RSP can bundle up services, value-add and justify the mark-up that they will place on them then it should have the right to bid for that business, as the bill allows. The question, of course, is: should these entities be forced to deal with a retailer who will insert themselves into the value chain with their own mark-up if their services are not required? That is a difficult one. The submitters who put their case rested their arguments on the greater public benefit of competition without recognising that actually competition still applies; they are free to compete. Given the depth of feeling around the issue, this is another one we would like included in the review. If there is ambiguity about whether those matters will be reported on under the amendments we placed into the CCS bill last year then we want it explicitly spelt out so that the parliament, the general public and the industry know whether the provisions are being abused.

Senator Birmingham addressed freedom of information in his remarks as well. This issue has had quite a lot of airtime since David Crowe in the Australian Financial Review revealed that NBN Co. would not be caught by the Freedom of Information Act because of its status as a corporation rather than a government department. The government argued that it did not intend to exclude the NBN from freedom of information legislation; it just happened to turn out that way. So it negotiated with us to bring it into the domain of FOI. We sought to fix this issue in the House of Representatives, and I thank the government for the spirit in which it went into those negotiations and the House Independents, who supported the Greens amendments.

What we sought to do was to have the NBN treated the same way as any other government business enterprise, whether that be CSIRO or Australia Post, which carries out part of its operations on a commercial basis. We tweaked the definition of ‘commercial practice’ as it is currently read in the FOI Act to remove reference to competition—since, as a state monopoly, the NBN will not actually be in competition with anybody—but we still wanted the normal operations of the act to apply.

Senators might have noted—Senator Birmingham certainly did—the highly critical comments of Mr Turnbull on the way through the House debate. He pointed out that the way in which modern interpretation of the FOI Act treats commercial information means that we were according NBN Co. an unacceptably low threshold of disclosure. I admit that that is something that disturbs me as well. I had not been aware that it was something that kept the conservative side of politics awake at night, but I will take the point. Commercial information is accorded almost sacred status in the FOI Act and elsewhere in public policy. The assumption is always against disclosure. No harm to anyone needs to be demonstrated. It is as though commercial secrecy should automatically trump the public interest.

I should say that our reading of the drafting of the FOI Act is that it is not even commercial secrets that need to be withheld; it is commercial information—anything relating to the running of the business should automatically be precluded from public disclosure. So it is an attitude curiously at odds with theories of free markets which assume that everyone in the market is given maximum access to information so that they can go out and make their rational, self-interested decisions. That strand of thinking obviously never made it into the FOI Act. I recognise that these concerns stray well into a different portfolio and are not strictly a concern of the communications minister, who just wants to get the bill through. But I think we will need to open this issue up again in the committee stage when we get to it tomorrow, to have the FOI Act itself amended to make sure that, as far as NBN Co. is concerned, the presumption is that commercial information will be released unless it can be demonstrated that some harm will be caused if it is released.

I think applying some kind of threshold test so that the assumption is not automatically that disclosure will be refused is probably the best way to strike the balance. The coalition are proposing amendments that provide complete exposure to NBN Co. to freedom of information requests, and I think that that is straying too far in the other direction. So we are going to try and find somewhere in the middle that allows commercially sensitive material, or material which would be destructive if it were released, to be withheld. Those arguments can be made and appealed. But let us do away with this blanket of secrecy that somehow accords sacred status to commercial information just because a business is being run.

I am hoping that that will satisfy the concerns of the opposition. I am hoping it meets the objectives of the government to presumably not have NBN Co. opened up to repeated hostile or malicious FOI requests, or whatever the concern is. Hopefully we will set something of a precedent in the way that the FOI Act operates as well.

On the issue of privatisation, I will only revisit these clauses briefly to note that it is the very strong view of the Australian Greens and many others that this network should stay in public hands. So that I am not accused of just playing to some vague left-wing stereotype, I would like to spell out why we believe this. The simplest explanation is one of purpose of the NBN Co. itself.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

You want to go back to the Telecom days.

Photo of Scott LudlamScott Ludlam (WA, Australian Greens) Share this | | Hansard source

Senator Macdonald, just listen and maybe you will learn something.

Photo of Steve HutchinsSteve Hutchins (NSW, Australian Labor Party) Share this | | Hansard source

Order! Go through the chair, Senator.

Photo of Scott LudlamScott Ludlam (WA, Australian Greens) Share this | | Hansard source

I do apologise, Mr Acting Deputy President. Through you: Senator Macdonald might learn something. The simplest explanation is one of purpose of the NBN. The primary overriding purpose of the National Broadband Network being publicly owned is to serve as an open-access, wholesale telecommunications provider to the entire Australian population. When it screws something up, the taxpayers have the right, through us, to call the company’s management before budget estimates committees and to amend its parent acts, including the ones that we are debating today, to bring it back into line. That is a degree of democratic control over the NBN Co. on behalf of not just the rest of the industry and its potential competitors but all Australians, and that is something that we should not give up lightly.

As soon as you privatise it by law, its primary purpose becomes to maximise its return to shareholders. It will do this by doing what Telstra did—leveraging the benefits of its incumbency into other markets. It will explore scope creep. It will push the boundaries. And that is why you did not hear a market outcry when the Greens got these provisions into this bill last year—in fact, quite the reverse. Coalition senators in particular might be interested to note the number of market players who have supported the protections against automatic privatisation because it protects their interests, because they do not want to be dealing with another Telstra situation. Telstra should never have been privatised, and what we are doing here partly fixes that mess.

The provisions that we put in, recognising that we cannot bind a future parliament to do one thing or another, were to remove the expectation of privatisation. It is not automatic anymore. That process will be initiated as a decision of the government of the day. Previously in the exposure draft we had an automatic privatisation process that rolled out that would automatically sell our interest down. That has gone. We wanted the Productivity Commission to conduct a public interest test and to feed their work into a joint parliamentary committee for report on the costs and benefits of the sale. Imagine assessing whether it is in the public interest to sell down our stake in the NBN Co. We think that is worth doing. The third thing that we proposed was that any sale should be submitted to a vote in this parliament so that the Australian people through their representatives, no matter how one-sided the numbers might appear on the day, can at least have their voices heard. That was all that we could realistically do, and I still find it amazing that some commentators and coalition MPs panned the idea of even doing a public interest test to assess whether the sale was a good idea or not. We think that is sensible.

To close, I think a couple of points are in order. The fact is that the network itself is a physical piece of infrastructure: it is glass and steel, it is powered by coal and it is transmitted through holes in the ground. We might imagine that cyberspace is some kind of ethereal realm or some frictionless virtual world that kind of frees us from the physical bonds of gravity and makes the whole place sustainable. But let us remember that this technology is embedded in quite prosaic fossil-fired technology. We need to see the same kind of ambition, vision and indeed risk-taking that we are seeing in telecommunications policy applied to the energy and transport sectors. When that happens, we will know that we have turned the ship and that we are truly on the way to a post-carbon economy. Instant telecommunications to anywhere in the world can be a big part of that vision, but only if we front up to the fossil underpinnings of the internet and do not pretend that it is somehow divorced from the rest of the world.

Probably the less I say about coalition opposition to this project the better. I think it is part of the quite destructive obstructionism that has characterised the Abbott era. Opposition spokesperson Malcolm Turnbull has brought a sharp and quite technologically literate critique to the project and he has certainly made the debate much more interesting. But pretending that wireless can compete with fixed fibre and offering nothing up by way of an alternate policy except a bucket of money to hand out to commercial providers and hope that they serve up decent service in the bush I think is a welcome confirmation that the Greens and the House Independents did the right thing in backing Julia Gillard over Tony Abbott last year.

Finally, to pick up some of the threads that I introduced at the outset, in wondering what Australians would do with a national broadband network I want to open up some larger questions. There is an undercurrent out there that is wondering, justifiably, why we would want to blow tens of billions of dollars on faster video streaming. I have seen it declared that the killer application for the NBN will be nothing more than IPTV, video streamed, faster, on demand from anywhere at any time, and that that is the bandwidth demand that justifies bringing glass fibre to your door. I strongly disagree. In fact, if I thought that was the case I probably would have advised my party room to vote against this package and everything that has come before. That world view that the internet is just about faster and more diverse television recalls the very early days of television in which presenters sat awkwardly in front of the camera and read radio scripts because that was the medium they knew and the audience was familiar with. I think this is another one of those moments. The internet is not like more channels of television, because it is fundamentally not a broadcast technology. Potentially it can actually do profound things to our democracy. Let us remember one thing that it will start to do, which is blur the boundaries of the nation state, because the whole planet is coming online. Australia is an extremely wealthy nation and we have our digital divide here. There is a planetary digital divide that is even more profound. But the number of internet users worldwide doubled between 2005 and 2010, and there are now nearly two billion people online. That is tremendously exciting. Of those, 400 million speak in Chinese. This connects us to the planet in ways which I do not think we are quite prepared for.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

In this debate, and it is a debate, there is one aspect of the contribution by Labor Party members with which I agree, and that was when Senator McEwen said that this legislation was typical Labor government legislation. I agree with her entirely. It is dysfunctional, it is uncosted, it is not planned and it is ad hoc. We hear from Senator Ludlam, the other part of the Labor-Greens coalition that runs this country at the present time, that the National Broadband Network Companies Bill 2011 that we are all here debating is not actually the bill we are going to vote on. Senator Ludlam knows, and I am glad that he let the cat out of the bag, that the bill is being amended as we speak.

So what are we supposed to be debating here when the bill has provisions that none of us, not even Senator Ludlam, have even seen? That is typical Labor Party legislation—I could not agree more with Senator McEwen. When it is a bill dealing with a commercial enterprise introduced by a minister who has had completely nil experience in commercial activities, you can only shake your head and say, yep, it is a typical Labor enterprise. Senator Conroy is a lovely fellow—a truck driver, I think he was. Certainly he worked with the Transport Workers Union. I suspect Senator Sterle would probably disagree that he was ever a truck driver. But his experience in dealing with business is obviously very limited. The whole course of this bill typifies that.

Senator McEwen also said that this discharged a Labor Party promise before the 2007 election. Hang on, Senator McEwen: if you go back and have a look at exactly what the Labor Party promise was before the 2007 election, it was to deliver a fast broadband service for a cost of $4.7 billion. That was the commitment—$4.7 billion. What are we up to now? It is $55 billion, by best estimates. Senator Cameron was talking about some lesser figure, but they conveniently forget that, to get this up and running, in addition to the dodgy figures being promoted as the cost of the NBN they are going to pay Telstra anything from $11 billion up to, as I read in a report the other day, some $16 billion. I notice that in the weekend press Telstra are now not even saying they are going to be part of the deal. Remember, this was all to be done by 1 July. I see Telstra are not even having their meeting now until perhaps, at the earliest, September. So we are going to fiddle around not knowing exactly what this is going to cost the Australian people.

Senator Ludlam referred to the children in the gallery and said that they will benefit substantially from a fast broadband network. We all agree that everybody in Australia wants a fast broadband network, but we want a network that people can afford. Someone has to pay the $55 billion. Before our Senate inquiry into this, people came to us starry eyed, all keen for the NBN, and when you asked them whether they knew how much it was going to cost and who was going to pay for it they looked a bit crestfallen and said, ‘Well, no, we just want it; we know it is going to be good.’ Of course it is going to be good—any fast broadband network would be good. In fact, if the coalition had won the 2007 election, this network would be up and running now at a cost of $5 billion, which would have meant that the students and the mums and dads could afford to pay for it.

We do not know what the mums and dads of these students watching this debate are going to have to pay for this NBN, because it is $55 billion—but remember the Labor Party promised $4.7 billion. That has blown out by some $50 billion. What is worse, the Labor Party promised they would get a commercial return on that $55 billion, and they would pay back all the money that they would have to borrow to get it. It just does not make business sense. That is why the Labor Party has refused to get a cost-benefit analysis done. If it is so good, why oh why wouldn’t Senator Conroy get a cost-benefit analysis done? It would prove to the world what he has been saying. He says yes it is good and yes it is affordable. The best way of demonstrating that is to get an independent cost-benefit analysis done. He has continually refused to do that, and that in itself demonstrates that this will not be cost effective.

Senator Cameron and Senator McEwen both raised the old class warfare arguments that the Labor Party is so good at: ‘We are looking after the poor people. We are giving this fast broadband network. It’s not just the rich companies that will be able to have the fast broadband.’ That is all part of the Labor Party’s socialist class warfare mantra—which, I might add, nobody else in Australia follows these days, apart from the Greens. How can you get affordable broadband to all Australians when you have a $55 billion price tag on it, one which they guarantee they will make a commercial return on? Of course, promises by the Labor Party are completely irrelevant these days. We all remember how the Prime Minister, two days before the last election, hand on heart, hand on the Bible—I don’t think she uses a Bible, so whatever she believes in—said, ‘There will be no carbon tax under a government I lead.’ What do we have now? A carbon tax. So how can any promise of the Labor Party be accepted?

Senator McEwen spoke about Tasmania. The Tasmanians are going to start to find out what the cost of the NBN is. Sure, it has been operating for about a year now. But there has been no charge for the NBN. It has been given to them for free in Tasmania. Even then, the number of people signing up to the NBN has been disappointing from the government’s point of view.

The National Broadband Network Companies Bill has been very clearly explained by both Senator Birmingham and Senator Fisher. The clear fallacies in the bill, the inadequacies in the bill, have been pointed out. The volume discounts are causing great concern, as is the suggestion that enterprises like ACTEW will be prejudiced in their current economic and business case by this bill, which simply has not been thought through. As Senator Ludlam said, trying to defend his mates in the Labor Party, ‘I am sure they did not intend it.’ But that is just typical of the Labor Party. All of these things are done. Nobody looks through them, nobody thinks about them, and we find a bill that is being amended as we speak, as we are debating it. We do not know what it is going to be. The Labor Party and the Greens might know what it will be, although Senator Ludlam confessed that not even he knew. So what are we doing here debating something that is still being written?

Senator Ludlam talked, as did the Labor Party contributors, about freedom of information, about making this public and open and accountable. After all, this is not some private company’s money. This is not some investor’s investment in a commercial enterprise. This is the money of every single Australian taxpayer. Every mum and dad in Australia has an interest in how this money is being spent. We are entitled to know how it is being spent by this group that wants to be faceless, that wants to hide behind the veil of commercial-in-confidence. What can be commercial-in-confidence when you are running a monopoly? You do not have anyone to compete with. You are there on your own. It does not matter what people know about your business; they cannot take advantage of it because you are a monopoly—you are the only one in the business. That is what we are ending up with under this typical socialist Labor Party legislation. It is a monopoly business which is going to run telecommunications in Australia.

The Senate Environment and Communications Legislation Committee examined this bill. The government wants this enterprise to be a monopoly. Of course, the Greens have never made any secret about the fact they want the government to always own it, because they believe in socialism, in government ownership of enterprises. The Labor Party used to, but they got out of that 20 or 25 years ago. But they are being brought back into it now, because it is now the Greens, led by Senator Brown, who run this government. They want governments to own commercial enterprises, but they will not have any competition. So who cares about commercial secrets?

We said to a number of witnesses: ‘When you deal with a monopoly, don’t you run the risk of going back to the old PMG/Telecom days when Australian telecommunications were light-years behind the rest of the world? That was because a government monopoly ran our telephone system.’ I can remember when, in the old days, you would turn a handle on the telephone and about five different people on the party line could pick up the phone. That was the state of telecommunications when the government last had a monopoly on telecommunications in this country.

We have progressed because there has been competition. The competition out there is fierce and that is why we are getting all of these new technologies. Because the Labor Party is being urged by the Greens—and I know a lot of Labor Party people do not agree with us; I do sympathise with them, but the Greens are calling the tune—we will have this monopoly that will not be subject to any competition. What will be their incentive to get with the latest technology? There will be absolutely none. They will just charge what they like and make whatever profits or losses they like. They will not have to compete with anyone at all. Why would they invest in new technology? Why would they be bothered? Of course they will not be bothered, and the chances of it ever being privatised are slipping by the day. As my colleagues on this side have pointed out, it can only be privatised if that great business brain Senator Conroy or whoever follows him in this field—it will be someone with equally good private business expertise I am sure, and I say that cynically—certifies that it is fully operational and complete. Of course that will never happen. It will never be complete, so it will never be privatised. The Minister for Finance and Deregulation—currently Senator Wong, with a great commercial background—will have to certify that market conditions are suitable.

There are a lot of good people in the Labor Party. I love them all. But you cannot say that they are great businessmen. Their background in coming here is either the union movement or working for another politician. Yet these are the people who are going to tell us when market conditions are suitable—now come on! This is typical Labor Party socialist legislation.

You have only got to look around. When we all leave this place and go out into the real world, when parliament is not sitting, we talk to young people who wander around with their laptops. We even do it ourselves. Sorry; where is the NBN fixed-line connection to them? Everyone, except parliamentarians these days, seems to have these iPad things which are even lighter and smaller than laptops. I cannot see the NBN being connected to them either.

Clearly, there are new technologies coming in all the time. I have got no idea what they are going to be, but people out there understand that day by day, almost hour by hour, there are new technologies coming. People are flocking to them. They do not include fixed-line NBN work. They include all of the latest things that are happening in competition in an industry that is very competitive. So what is happening in Australia? We are going to be locked into $55 billion of investment that the taxpayers will have to pay for—not the Labor Party, not the NBN executives, not all those people who think it is a good idea but don’t want to pay for it—while the industry will have moved on. Technology will walk around Australia. We will have a government monopoly running the show, as we did back in the old Telecom days, which does not have to make a profit, does not have to compete and does not have to get up with the latest, and Australia will be taken back again.

There were a lot of other things that came out of the Senate committee inquiry into this bill that I would like to debate. Unfortunately, time is going to beat us again in this debate. Perhaps we will have some opportunity in the committee stage of the debate. I am not sure if Senator Xenophon, who I see has just entered the chamber, is aware of this. Senator Xenophon, save your time. Do not bother debating this bill, because we learnt five minutes ago from the Greens section of the government that there is new legislation being written as we speak. What we are supposed to be debating I am not quite sure about. Senator Ludlam himself even said, ‘I can’t really say too much because the legislation is not before us.’ What are we doing here? Again, I agree with Senator McEwen. It is typical Labor Party socialist legislation—completely dysfunctional, completely unthought through, completely without even a modicum of business or commercial honesty.

We went through the issue of the retailers. Of course, the whole thing was that the NBN was going to be wholesale only. That is falling apart as we speak, again because Senator Conroy had no idea about all of these issues which, if he had gone out to the industry, they could have told him about. It certainly came up in the Senate committee hearings. The Labor Party are now rushing back at the last hour, as we speak on the bill, after it has already been passed by the other house of parliament—a great lot of scrutiny they did over there, obviously! The government is amending the bill again. That is typical of this whole sorry saga of the NBN.

The $4.7 billion we were promised by the Labor Party before the 2007 election is now some $55 billion. You cannot go back in history, unfortunately, but if the coalition had won that 2007 election the NBN—fast broadband to every home in Australia—would be up and running today. It would be almost 12 months old now and it would be there at an affordable price, taking account of the existing networks that had been put in place by the existing providers. It would have been a competitive network that would have ensured that Australians could expect that we would keep up with the latest technology in the future. But here we are debating a bill entrenching a government monopoly, with provisions that not even the Greens part of the government are currently aware of. They have no idea of what the legislation is. It will be another rush job done on the run, and that will mean that we will end up with all the same sorts of problems that we have seen in the past with this NBN fiasco that has been thrust upon us by the Labor Party at a cost of $55 billion. Senator McEwen, I certainly agree with you: it is typical Labor Party legislation.

11:58 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

We live in a rapidly changing world, and the government’s desire to create a national broadband network is a response to this speed of change. Globally, we are more interconnected than we have ever been. I believe it is essential that Australia prepares itself for the future. That said, the NBN would be an extraordinary investment into a technology that has its supporters and also its critics. Because the investment will require tens of billions of taxpayer dollars, it is not going to be like any other business. Nor should it behave like any other business.

This brings me to an area I have significant problems with. We need to remember NBN Co. will be equally owned by all Australians, and I believe it should treat all customers equally. That is why I do not believe NBN Co. should be allowed to provide some carriers with preferential pricing, terms or conditions. Under the current arrangements telcos which showed the ability to provide a quantifiable efficiency may be entitled to a better price or service from NBN Co. I believe this is fundamentally wrong. Governments should not be providing sweeter deals to one retail business over another. I understand the ACCC will prepare ‘guidelines’ for any exemptions to the non-discriminatory provisions, but I do not believe this is good enough. Individual cases will not be scrutinised and any breaches will only come before the ACCC if they are raised and, by then, it may be too late. After all, how do you prove ‘efficiency’? How do you quantify ‘efficiency’? I think it is very important that we do not make the mistakes that were made with the privatisation of Telstra, where we had a vertically integrated monopoly, in effect. I think it is very important that in the context of this legislation we set the framework very clearly in ensuring that there is not discrimination in pricing.

Under the legislation, exemptions may be provided under a very broad term which currently has no framework for how it would be applied. I am concerned that the companies that will be best suited to demonstrating efficiency will be the larger established telcos. We should not be setting up arrangements which favour the large telcos at the expense of small or newer players. It would entrench the big telcos’ positions and set up barriers for smaller telcos who often are so crucial for providing innovation and new products and services. They are so critical in driving competition in the marketplace.

I understand that in business wholesalers provide goods or services at different rates depending on the retailer, but NBN Co. is not like any other business. It is owned, in effect, by the taxpayer, and governments should not be playing favourites. Is it not inevitable that the big telecommunications providers, such as Telstra and Optus, will be the ones who will benefit most from such an exemption? I note that the CEO of NBN Co., Mr Mike Quigley, has publicly stated that volume discounting will not occur; however, the provision for it still exists within the legislation. I think that is highly problematic. Volume discounting means that the Telstras and Optuses of this world could be able to access the NBN at different rates or terms and conditions based purely on the fact that they hold the majority of the market. This is my concern: the big players will continue to dominate the telecommunications market and the smaller providers will be pushed out. The end result will be bad for consumers. For too long Telstra has dominated the industry and consumers have paid the price.

I note the opposition’s concerns around the potential for the intention of NBN Co. to be wholesale-only to be undermined by some aspects of this legislation—the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011. I can see the opposition’s argument that allowing utilities direct access to NBN Co. means that the role of NBN Co. will go beyond that of a wholesaler. However, my understanding is that the legislation will enable utilities wholesale access to NBN Co. for ‘necessary and desirable’ uses only—for example the road network and rail system monitoring. More details are needed about the process which determines what is ‘necessary and desirable’ and to have sufficient safeguards to ensure that it does not cover such things as the telephones and internet in the head office. Further, any cost savings to utilities by allowing them to access NBN Co. as a wholesaler rather than having to go through a retail service provider would, I suspect, result in lower costs for their customers.

Similarly, I understand the opposition has concerns about provisions which allow corporations who are willing to invest in their infrastructure and obtain a carrier’s licence wholesale access to NBN Co. The issue of scope creep is something I am concerned about and will continue to consider as we go into the committee process.

Finally, on the issue of cherry picking, I note the opposition’s concerns that it may be anticompetitive, but I do also note that this is a significant taxpayer funded investment which must be protected to some extent. I believe that the removal of price discrimination provisions and volume discounting may provide the competition needed at the retail end which will allay any need utilities and corporates have to access NBN Co. directly. After all, if the retail service providers offer competitive deals to the Westpacs, Australia Posts and Origins of this world, they will not see any need to invest and become carriers themselves.

I believe the NBN is a good idea. We need to invest in broadband technology that will allow Australia to stay in line with telecommunications developments internationally, allow businesses to be able to compete internationally and allow households to have access to the internet at speeds we once thought out of this world but which are now mainstream in so many countries. But the legislation that supports this technology needs to be watertight. We need to ensure the system works profitably but also fairly. I cannot accept that preferential pricing or conditions are fair.

There is a lot at stake here, and Australian governments do not have a good track record when it comes to telecommunications. There was AUSSAT, which was later described by former Prime Minster Paul Keating as ‘a billion-dollar piece of space junk’, and there is no doubt that the privatisation of Telstra created a vertically integrated monopoly in our telecommunications market. That is not just my view; it is also the view of the OECD, which found:

… despite an enviable record of deregulation, Australia stands almost alone in allowing an historic monopoly to continue to dominate its telecommunications.

That is one reason why we need to break that up. That is why I supported the structural separation of Telstra. I believe that was the right thing to do because it has so simply constrained our telecommunications industry and allowed the domination of Telstra in telecommunications.

It is worth referring to the explanatory memorandum for this legislation. Page 1 says:

Structural separation may, but does not need to, involve the creation of a new company by Telstra and the transfer of its fixed-line assets to that new company. Alternatively it may involve Telstra progressively migrating its fixed-line traffic to the NBN over an agreed period of time and under set regulatory arrangements, and sell or cease to use its fixed-line assets on an agreed basis. This approach will ultimately lead to a national outcome where there is a wholesale-only network not controlled by any retail company—in other words, full structural separation in time. Such a negotiated outcome would be consistent with the wholesale-only, open access market structure to be delivered through the National Broadband Network.

I note that other senators—and I am sure Senator McEwen will shout me down if I am wrong—made reference to the importance of having open access with the National Broadband Network. My interpretation of ‘open access’ means ensuring that there is not price discrimination. That is quite critical.

The explanatory memorandum is in black and white but it seems that some of the provisions of these bills go against the very grain of the fundamentals of this legislation. The NBN will structurally separate Telstra and nothing that happens through preferential pricing or some other measure should be allowed to benefit the big telcos at the expense of smaller players.

I note that there are provisions in these bills concerning privatisation. This is an important issue. We do not want a repeat of history where a short-term political decision is made that ends up costing us all dearly in the longer term, as I believe we saw with the privatisation of Telstra. In summary, it is possible to have a good idea but to execute it badly. My concern when it comes to preferential pricing and conditions is that we are seeing just that.

12:07 pm

Photo of Mark ArbibMark Arbib (NSW, Australian Labor Party, Minister for Social Housing and Homelessness) Share this | | Hansard source

The government’s National Broadband Network policy will deliver access to high-speed broadband for all Australians and will also deliver structural reform of the telecommunications industry to promote for the first time sustainable retail level competition. Together, the National Broadband Network Companies Bill 2011 and the Telecommunications Legislation Amendment (National Broadband Network Measures—Access Arrangements) Bill 2011 will ensure that NBN Co. delivers the government’s objectives. The NBN Companies Bill sets out key obligations on NBN Co. to limit it and focus it on wholesale-only telecommunications. It also covers the government ownership and provides for the eventual sale of the Commonwealth’s stake in the company, including clear parliamentary oversight.

The NBN access arrangements bill establishes clear supply equivalence and transparency obligations for NBN Co. that will ensure it can provide a robust platform for vigorous retail competition. The bill also sets out obligations for providers of superfast fixed line networks to ensure they operate under comparable regulatory arrangements to those applying to NBN Co.

The government believes that the bills strike an appropriate balance between controlling NBN Co.’s operations and providing sufficient flexibility to respond to market circumstances. The government supported the Australian Greens amendment to the NBN access bill to add NBN Co. as a prescribed authority under the FOI Act with an exemption for documents in relation to its commercial activities. This is in addition to the usual oversight activities applying to such a government business enterprise and the two parliamentary committees the government has established to monitor the NBN.

The government welcomes appropriate scrutiny of NBN Co.’s operations. The government welcomes the report of the Senate Environment and Communications Legislation Committee and its recommendations that the bills should be passed. However, the government does not support the amendments to the bills proposed by coalition senators in their minority report. These amendments have already been rejected in the House.

The government also believes that it is important that utilities should, if they wish to, be able to purchase basic connectivity services from NBN Co. for their sole internal use. Banning this, as the opposition proposes, could inhibit the deployment of smart infrastructure. The government also opposes the opposition’s proposed amendment that NBN Co. should be restricted through statute to operating at layer 2 in the telecommunications technology stack. It is clear from the government’s statement of expectations to NBN Co., and from NBN Co.’s corporate plan, that NBN Co. must operate at layer 2. However, some of the technical functionality that NBN Co.’s customers want operates at layer 3. A simple black-and-white layer 2 rule and statute would therefore be inflexible and counterproductive. If such certainty is required in the future, the NBN Companies Bill provides that the minister can make a licence condition on what services NBN Co. must and must not supply.

The government also rejects the opposition’s amendments to provisions in the NBN access arrangements bill designed to deliver a level playing field in the rollout of superfast fixed-line networks. Removal of the level-playing-field provisions will undermine the government’s policy that NBN Co. deliver uniform national wholesale prices, as well as NBN Co.’s business case which provides for a cross-subsidy from high-value areas to less profitable areas, like most of regional Australia. This will lead to less equitable outcomes for regional Australians and less robust retail competition.

Without these provisions, many communities would get a non-NBN solution and could be serviced by a single, vertically integrated provider that does not provide access to other providers. This means that end users serviced by the provider would not have access to the same kinds of service outcomes that would be available to end users on the NBN. Responding to a comment made by the Senate Environment and Communications Legislation Committee that the level-playing-field arrangements could be further clarified, we have been engaging with industry on this matter, and the government will shortly be introducing amendments in the parliament to address this.

The government also rejects the opposition’s proposed amendments to the provisions dealing with the possible future privatisation of NBN Co. The opposition’s proposals would simply enable a future coalition government to sell NBN Co. as quickly as possible, regardless of the needs of regional and rural Australians and the public benefit from restructuring the telecommunications market. The effect of this removal would also remove the right of a future parliament to disallow any sale. The government considers that a sale decision is best made in the future by the government and parliament of the day.

The opposition’s view that any discrimination that aids efficiency should be struck out of the NBN legislation shows an inherent misunderstanding of how these provisions will work. Discrimination based on efficiency has long been recognised to promote competition and innovation in the market. The NBN access arrangements bill already contains safeguards to address the concerns. Under the bill, NBN Co. cannot offer a volume discount unless it is in accordance with a framework that has been approved by the ACCC as part of NBN Co.’s special access undertaking. Further, any differentiated deals must be published so there will be full transparency and the ACCC and access seekers can take action if they consider that the rules have been breached.

The government will be proposing some amendments that will further strengthen the ability of the NBN to deliver on its nation-building objectives, that will improve the operation of the bills and that will deliver further certainty for industry and the community. For example, a series of amendments clarifies the operation of the level-playing-field provisions, ensuring they are focused more tightly on local access networks, targeting residential and small business customers, and that minor extensions to existing superfast networks, and connections of new customers to existing networks will not be subject to the provisions. As indicated last December, the government will also propose amendments to the level-playing-field provisions to add a wholesale-only requirement. I look forward to debating these amendments in committee.

The passage of these bills, as recommended by the Senate legislation committee, will provide certainty for NBN Co. and industry and facilitate the rollout of the NBN so we can get on with delivering the benefits of superfast broadband for all Australians.

Debate (on motion by Senator Arbib) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.