Thursday, 19 March 2015
National Broadband Network Select Committee; Report
Ordered that the report be printed.
That the Senate take note of the report.
First, I acknowledge the efforts of the staff of the select committee's secretariat. The hard work they do and their dedication as this committee conducts its work across the country are genuine testament to their professionalism. I also thank my Senate colleagues on the committee for their cooperation and contributions. The Select Committee on the National Broadband Network no doubt will continue its work but I think the necessity for an interim report encapsulates the work that the government has sought to do over the last little while. This report primarily lends itself to reflecting on a plethora of reports and reviews that the Abbott government has undertaken with respect to the National Broadband Network.
I will make three points and then reflect very briefly on the recommendations. Eighteen months into this government's term the NBN Co is still too uncertain to divulge how much the multi-technology mix, or MTM, will cost or how long it will take to build. The committee noted that the headline financial and deployment numbers that have been divulged to date by NBN Co and the government are outdated and indeed unreliable. The committee also found that NBN Co's strategic review was unreliable in the case of all examined scenarios. We know it was completed in just five weeks, with no external independent oversight, and the committee found that it contained financial manipulations and other irregularities. Over the past 12 months these concerns have largely been borne out, with key NBN Co management distancing themselves from the report
The report also found that the cost-benefit analysis conducted by the government was deeply flawed and is not credible.
I know my colleague Senator Conroy will expand on these points, so let me conclude by making a couple of my own. I believe a network that relies in any way on Telstra's copper network is not and can never be a national broadband network. I spent years—many years ago now—in this place examining the state of Telstra's copper network. This work contributed to informing not only our policy to build a national broadband network based on fibre to the premises but an understanding that an overbuild was necessary—because Telstra's copper will not stand the test of time. It has already been failing for years.
To allow part of that existing copper network to form part of a multitechnology mix is absolute folly. It ensures that, under this government, what they continue to call the National Broadband Network will never be any such thing. In this report we have documented in a very detailed way the great travesties and manipulations concerning the business and conduct of the National Broadband Network. But the fundamental issue is that a network that is no longer a fibre-to-the-premises network but has gone back to the old multitechnology-mix approach of the former Howard government will never deliver the universal high-bandwidth network to Australia—nor the commensurate economic and social benefits—that would have put us ahead of the pack and allowed Australia to be the most substantial test-bed network for high-bandwidth connectivity among the developed nations of the world. That is a great shame. I commend the report to the Senate.
Before I make some remarks on the second interim report of the Senate Select Committee on the National Broadband Network, I acknowledge the work of Senator Lundy, who has been the chair of the committee since I have been on it—since the coalition took government. I wish her all the best in her retirement from this place. I also acknowledge the extraordinarily hard work of the committee secretariat. This has not been an easy committee to work for, so I acknowledge the way they have managed to manage a committee that has met on so many occasions. It has met so often that I have started to dream about the NBN committee during my sleep!
The National Broadband Network is an amazing concept and something I think all Australians look forward to being part of in due course. However, I have to make the comment that we, through this committee, have to stop looking backwards. We have to start looking forward.
I will get to that, Senator Conroy. We need to start looking at how we can best roll this project out so that the people of Australia can benefit from what is a huge infrastructure project, a project that is going to cost Australian taxpayers billions and billions of dollars. Regardless of what the final multitechnology mix looks like, it is still going to be one of Australia's largest infrastructure projects ever. It was quite interesting listening to Senator Ludwig earlier. He referred to something as 'looking like a dropped pie.' We need to remember, Senator Conroy, that what we inherited when we picked up this project upon coming into government resembled that dropped pie that Senator Ludwig was referring to.
This was a committee that was established using the numbers in the Senate, so it does not reflect the government. It is a select committee that can meet without any government members being present—and did so on a number of occasions before government senators were appointed to it. Beyond that, it is appropriate and timely to put on the record that, since November 2013 when this committee was first established, it has called 22 hearings. The committee has demanded that NBN executives appear before it for a total of not less than 272 hours. Consider what the cost of attendance at these the hearings has been, not to mention the cost in lost hours—including the hours these executives have had to spend travelling to and from the hearings, because of course they are not Canberra based—the lost productivity, the airfares et cetera. Over a space of about 15 months, this has been an extraordinary amount of time to be demanded of the executives of any government business enterprise. They have turned up time and time again and have often been asked the same questions over and over. This is despite the fact that sometimes committee members have already known the answers to their questions—they have just been attempting to be mischievous.
In contrast, the Joint Committee on the National Broadband Network, which was a committee of the previous parliament—a committee of both houses of parliament and a committee that reflected the make-up of that parliament—met for a combined total of 39 hours through eight hearings. I wanted to put that on the record so that anyone who was seeking to hear or read the contributions in relation to this report can understand that this committee has degenerated into little more than a witch-hunt. I hope that, now that this report is out of the way, we can settle down and start doing something positive. I hope we can start doing the real job of the select committee, which is to monitor the rollout of this extraordinarily important project for Australia.
We need to set the agenda to go forward in a way that will allow us to get some productive outcomes from this committee. To achieve that, this committee needs to be a properly constituted committee—and preferably, because of the importance of the NBN project, not just a Senate committee but a joint standing committee of both houses of this parliament. The sooner we get back to that, and the sooner we start focusing on the future rollout of this very important project, the better. I stand today to say that I do not believe that this report of the NBN select committee reflects the sentiments of everybody who attended nor the evidence of the witnesses.
I do have to respond to some of the quite misleading claims that have just been put on the public record—quite misleading statements. Let's us be very, very clear about this—
I withdraw; I would not want to offend Senator Ruston. Let me be very clear: so many meetings of this committee are needed, because not one single answer has been given to the committee on the simple fact of: how much Mr Malcolm Turnbull's dog of a network is going to cost—not one answer to that question no matter how many times we ask it and no matter how many times we sit there and ask the simplest and most straightforward questions.
We do not know how long it is going to take to build. We do not know what it is going to cost. We do not know what its revenue forecasts are. We do not know what the expenses of its teams are—simply stonewalled every single time.
At the last hearing, I think I commented that nearly 80 per cent—that is eight, zero per cent—of the questions that I asked were taken on notice. Over a five-hour hearing, 80 per cent of the questions I asked were taken on notice. It will come as no surprise to you, Mr Deputy President Marshall, that when we get these answers heavily doctored by Minister Turnbull's office, we will need to ask the same questions again, because the officers of NBN are not allowed to answer questions.
We had the quite extraordinary example at the recent committee hearing, when I asked a very straightforward and simple question to the expert of HFC technology—the newly-hired one, $800 million a year—the chief executive leaned over and said out loud: 'Don't answer that question.' Just leaned over—it was that blatant.
Mr Turnbull used to laugh and make jokes about the Kremlin when it came to NBN before. The Kremlin is a beacon of transparency compared to the gulag at NBN headquarters in North Korea that is being run by this government.
After 18 months, the public of Australia do not know the cost of Mr Turnbull's dog of a network—not a single cost, not a single revenue, not a single expense and not a single contract. In fact it is so absurd now on this committee that, when you ask them: what is the cost of the contract with this company?'—a major public company? They say, 'We can't tell you.' I say, 'But this company have released this information to the stock exchange, because it is material to them. Can I read you their press release to the stock exchange? Can you confirm this is the truth?' And they say, 'We can't comment.
So do not come in here and cry crocodile tears about the number of meetings and the number of hours when these officers are directed by the minister, the chair and the CEO of NBN Co in front of the committee to refuse to answer a single question.
You might find it funny but there are times when you will not always be in government. You are breaching every possible informal rule that we have about how we deal with public servants. 'I won't
tell you the cost of a contract. 'But it is released to the stock exchange.' Or: 'I can't comment on that.' 'Is it true?' 'I can't comment on that.' 'So are they lying to the stock exchange?' 'I can't comment on that.'
Abusing the committee processes of this chamber is a disgrace. The minister stands condemned. The board of NBN Co stands condemned. The executives of NBN Co stand condemned for treating the committee of this parliament and the people of Australia with open and cold contempt—and then they laugh about it while they sit there in front of us.
I also want to speak on the second interim report. You will recall that the first interim report found that the NBN's strategic review contained financial manipulations and other irregularities. That was no great surprise as I talked about last time: it was put together by Minister Turnbull's yachting buddy of 15 years—they actually jointly own a yacht on Sydney Harbour. You have to put someone in place that is your best mate to give you the dodgy report to start with.
But time has proven that the committee was right in its statements. NBN Co management have been crab-walking away from this disgraceful, dodgy report prepared in 11 weeks and they will not endorse it—they just cannot get away from it fast enough. That has left the minister with a couple of problems: first, it was on the basis of this dodgy report that he used this fig leaf to say that fibre to the premise was too expensive to build; and, second, he no longer has a platform to say that fibre to the premise is too expensive to build. So what does he do? He has another review—his seventh review in 18 months. This minister is very fond of providing his mates with a steady stream of income on the taxpayer dime but not so good at actually rolling out a network by 2016. The latest review makes wildly inflated estimates of the cost of fibre. Internationally, the estimates by NBN Co executives are a joke. People laugh openly when they see the fabrications and constructions used to inflate these numbers.
The minister has engaged in some creative accounting here. Let us be very clear about this. First, even though NBN Co use this figure as an expense internally, inside NBN Co, he has decided to capitalise opex to Telstra for its ducts. So you take an expense that is an internal expense. You say: 'No, no; that's not good enough. The numbers are not high enough to back up the numbers we've claimed for the last two years, so we've got to actually take an expense from a different part of the accounts and capitalise it and add it to the numbers to try and bloat up the fibre-to-the-premise costs.' So $737 of the alleged cost of NBN's fibre-to-the-premise rollout is entirely a dodgy fix—from one set of the accounts in NBN Co to an external claim that it is part of the cost. No other country in the world, no other company in the world, tries to pretend that those sorts of opex expenses are part of the cost of an FTTP build—none of them. Shame on you, Minister. Shame on the board of NBN Co for having to prop up its dodgy decisions with absolutely fabricated numbers like this.
Second: 'Let's throw in some opex costs from internal labour. There's another $170. Oh my goodness; we still can't get the number high enough to justify wasting $30 billion of taxpayers' money on this dog. Let's just say: all of those people sitting in that corner—all of those people and their wages—we're going to capitalise their costs for the purposes of NBN Co's fibre-to-the premise rollout.' Again, no other company in the world tries to account for its fibre-to-the-premise costs like this. It is totally and utterly a disgrace.
Third: 'Give in to delivery partners' ambit claims. Pay them whatever they want.' A whole bunch of disputes arose during the course of the rollout, and this board, this management, rolled over and just paid out as much money as it could to deliberately inflate the cost of the rollout to date. It rolled over and paid out hundreds of millions of dollars of taxpayers' money, just for the purpose of being able to pump up the numbers on fibre to the premise that was being rolled out. We have not been able to finally get a number on that one. NBN Co is hiding it.
Fourth: 'Direct officers inside NBN Co to stop rolling out cost savings.' That is what has gone on in the last 18 months. My time is almost up. I seek leave to continue my remarks later.
Leave granted; debate adjourned.