Tuesday, 13 March 2012
National Broadband Network Committee
I seek leave to move a motion in relation to the government's response to this committee's first report on the review of the rollout of the National Broadband Network.
That the Senate take note of the document.
Thank you, Madam Acting Deputy President. I thank the Senate and of course Senator Feeney in particular for his indulgence and forbearance to allow such debate to take place. It is showing an indulgence of free debate that is not always seen from those opposite in other ways. That could lead me to want to talk about media regulation and all manner of other things, but I will save those remarks for another opportunity.
This is the government response to the first report of the Joint Standing Committee on the National Broadband Network. I could go through how this response demonstrates how shoddy the delivery of the broadband services the government have promised has in fact been. I could highlight the fact that the speed with which we are seeing the rollout of the NBN and the actual delivery of new services to premises around Australia makes the delivery of home insulation by this government look like a veritable success, compared with the way in which, after 4½ years of talking about more broadband connections, faster broadband speeds and more accessible broadband for Australians, the government have managed to deliver it for a veritable pittance of the population and in fact are failing to even meet the very low targets that were set in the corporate plan of the NBN Co.
I want to go to some of the detail of this government response, and I want to highlight some of the contradictions that are inherent within this response and how they relate to the government's NBN Co. policy. Let us take a look at page 9 of the response, where it says:
To remain competitive in our region as the world moves to a 21st century digital economy, Australia needs to maintain the momentum and make this investment.
The most recent OECD statistics (for June 2011) indicate that Australia is ranked 21st out of 34 countries in terms of its number of fixed broadband subscribers per 100 inhabitants.
This, of course, is the doom and gloom scenario that we have heard from Senator Conroy for many, many years. It predates his time of becoming the minister. It is the scenario in which Australia has these terrible rankings for the rate of broadband connection.
But then, if you turn to page 11 of the government response, it says:
Australians are quick to take up technology, with access for household and business internet connections increasing an estimated 80 per cent over 2007-2010, and use of the internet by households, business, and government more than doubling over the same period.
… … …
Australia has demonstrated a high level of broadband adoption by businesses compared to the OECD average; with 90 per cent of businesses with 10 or more employees having a broadband connection in 2007.
So we have this remarkable contradiction here where the government, on the one hand, is citing what it claims is a low rate of broadband subscription in Australia as a reason why we need the NBN but, on the other hand, is citing an embrace of broadband connections in Australia as a reason why the NBN will be popular. Of course, you cannot manage to have it both ways. It is because the government has in this debate managed to confuse time and time again what the accurate measure of broadband should be. It likes to talk about the number of fixed-line subscribers per 100 people—which is the first quote that I used there that shows Australia ranked 21st out of 34 countries—because that ignores the number of premises or residences in play, whereas the more relevant measure is how many individuals or business premises have access to broadband through their business premise, household et cetera. That statistic reveals that Australia is doing very well and is ahead of most countries in the OECD. So we have this strange scenario where, even in this one document, the government is cherry-picking its statistics to argue, on the one hand, that Australia is backward and that is why we need this investment and yet, on the other hand, broadband is popular and that is why we need this investment, because there will be this massive take-up rate. It really does demonstrate in stark black-and-white terms the inconsistency of the government's arguments.
Then, if I look at what the government seeks to achieve, it again justifies this massive investment in the NBN by saying on page 14:
Evidence confirms investment in high-speed broadband delivers productivity gains. For example, The Economic Journal provides an estimate of the effect of broadband infrastructure on economic growth in the panel of OECD countries in 1996-2007, suggesting "… that a 10 percentage point increase in broadband penetration raised annual per capita growth by 0.9-1.5 percentage points".
The key word in there is that this alleged growth in annual per capita income was a result of 'penetration'—increased penetration of broadband and the accessibility and availability of broadband. It was not a result of increasing speeds of broadband, which the government's whole focus seems to be on. The primary consideration when it comes to the increased rate of penetration of households in accessing broadband is the matter of the cost of the service. Once again, the government's response does note this. Page 9 of the report indicates:
… OECD statistics indicate that Australians pay more for broadband than most other OECD countries.
They also show, however, that the nominal retail price of ADSL broadband fell between 2005 and 2010 by 69 per cent and that between 1997-98 and 2008-09 inflation-adjusted prices fell 34 per cent for fixed-line telephone services and 49 per cent for mobile services. So we have seen over the last decade decreasing prices in Australia for access to telecommunications products. We have seen competition delivering decreasing prices for broadband access as well as for other telco products, which has resulted in higher levels of adoption of these products by households and businesses, yet the government is charging ahead in putting in place this anticompetitive regime of the NBN, which will see the exact opposite take place, because in the NBN special access undertaking submitted to the ACCC NBN Co. has asked for the right to increase the nominal price of its main products by half the rate of the CPI. So, far from helping with the penetration rate of broadband into Australian households, the NBN will see, rather than the price decline we have had historically, an increase the cost of broadband services, and that will be what hurts the accessibility and penetration of broadband services.
So this report is littered with inconsistencies that highlight the false premises—to use a favourite phrase of Minister Conroy—on which the case for NBN Co. is built and the false arguments used to justify it, and it demonstrates again that taxpayers are being taken for a ride. This is the government's own report demonstrating the ride taxpayers are being taken on in terms of the billions of dollars being spent on the NBN. Unless there are further contributors to this debate, I seek leave to continue my remarks later.
I rise to make a few brief comments on this report, particularly relating to the way that the NBN has been rolled out in Tasmania. As you would no doubt be aware, the pilot projects for the NBN were targeted in Tasmania, being in Scottsdale, Smithton and Midway Point. They have been rolled out for some time, so it gives us an opportunity to have a look at how that is going. In Scottsdale the number of connection points that have access to the NBN is 1,200, and 12 per cent of those are connected; in Smithton the number that have access is 1,600, 14 per cent of which are connected; and in Midway Point the number of homes that have access is 1,200 and at this stage 25 per cent are connected. It is important to realise that 'connected' does not mean that they are receiving internet services through those connection points. 'Connected' just means that they have taken up the opportunity to have the hardware installed at their house. All the evidence that I can find suggests that the actual number of people who have the NBN connected to their homes and are using the NBN is much smaller.
I think that you can look at the estimates figures, and there are all sorts of things which suggest that it is actually quite small. Rather than 12, 14 or 25 per cent, you are probably looking at the single digits in terms of the people who are actually using it. But the low take-up rate does not worry the government at all. They do not really care that in a free market people who are offered the NBN products are choosing not to take them and are choosing to take other alternatives, because they are just going to close all the alternatives down and force you to take up the NBN. If you want to have a phone line, you are going to have to have the NBN. If you want to have the internet, you are going to have to have the NBN. They are just going to put in place a government monopoly, closing down all competition—competition which, it is important to understand, is what people are now choosing when they have the choice of taking up the NBN. They are not choosing to take that up; they are choosing other products which they are no longer going to be able to take up once the government closes down all competition. More particularly, in looking at Tasmania, one of the interesting things that I discovered and discussed at estimates recently was that the pilot programs in Scottsdale, Smithton and Midway Point were all fitted with a technology platform which is not the technology platform that the government are rolling out across the country as they now try and extend to further places. In fact, the technology platform is completely different to the extent that the nation's largest internet service provider, Telstra, are not offering their NBN packages in Tasmania. They have concerns about the level of quality that would be deliverable through their internet service packages if they actually offered them in Tasmania, given that the technology platform rolled out is not the technology platform forming the substantial part of the NBN.
Tasmania was supposed to have received the benefit from being the first mover in the NBN. It was supposed to put Tasmania way ahead of the pack and give Tasmania a huge advantage, particularly Tasmanian business, because Tasmania was getting the NBN first. Tasmania, actually, is now behind the pack as a result of being first. Tasmania has been given what is now redundant technology, a platform that is redundant, which the nation's largest internet service provider will not be offering packages for until such time as that technology has been retrofitted. I think this is an absolutely appalling outcome. Not only does it highlight the hypocrisy of the government in trying to sell a dud to Tasmanians; it also highlights their incompetence generally and their proclivity towards waste and mismanagement.
There will be a cost of retrofitting the technology platforms—to the 12 per cent, the 14 per cent and the 25 per cent that have connected in those three sites. It will not just be a change to a switch in the head office somewhere, but each house will have to be visited and the hardware—which may have been attached to the walls in those houses—removed, taken away and replaced with new hardware. That is going to take time. Until that happens the people who are connected in those houses cannot get Telstra or, possibly, other internet service providers to offer them packages. It is going to cost lots of money, money which will ultimately come from taxpayers.
In summary, Tasmania has not done well from being the pilot project. It has put Tasmania behind the rest of the country. It is going to cost us more, and it is just another example of how this government cannot take any project and manage it well. I seek leave to continue my remarks later.
Leave granted; debate adjourned.