Doorstop Parliament House Canberra > Mitch Fifield, Liberal Senator for Victoria

CONTACT SENATOR FIFIELD

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23-October-2017

 

Doorstop
Mural Hall, Parliament House, Canberra
23 October 2017

1:45pm

 

E & OE

 

FIFIELD:

Today we've had a series of revelations about what the true cost would've been of persisting with Labor's flawed approach to the National Broadband Network.

Data released today reveals that in some cases, connecting premises to fibre to the premise was costing $91,000. This is the product of the theological approach that Labor took to the nbn. That approach would've seen the nbn cost between $20 and $30 billion extra and take an extra six to eight years to complete.

What Labor bequeathed to the nation, with the nbn, was essentially a failed project. Despite $6.5 billion having been spent over the best part of four years, a grand total of 51,000 people were hooked into the nbn and contractors had downed tools in four states.

Because of the approach that this Government has taken, telling nbn: 'use the technology that makes sense in a given area to see the nbn rolled out fastest and at lowest cost', we're now in a position where the nbn is available to more than half of the nation. Where the nbn will be 75 per cent complete by the middle of next year, and done and dusted by 2020, six to eight years sooner than would've been the case under our predecessors.

And everything that the Australian Labor Party have said that they want to do in relation to the NBN would cost more and would see consumers paying more.

JOURNALIST:

Minister, we’ve just heard from you how it’s all Labor’s fault that the NBN is off track, not working properly. We’ve just heard from Michelle Rowland that everything that’s going wrong with the NBN is the Coalition Government’s fault. The reality is punters don’t care, they want it to work, they want it to be rolled out on-time and on schedule and to get the bandwidth that they want as well. What is this government, your government going to do to fix this problem?

FIFIELD:

What I’ve said is that the model that the Australian Labor Party adopted was flawed and had failed. We put an alternative model in place, which will see the NBN completed, as I said, six to eight years sooner than would have been the case under our predecessors. And between $20 and $30 billion less cost.

The NBN under our predecessors was essentially something that existed only in theory. The NBN today is a practical reality. It’s available to more than half of the nation. But we do recognise that when you're talking about a project which is endeavouring to do in about seven years what it took the PMG and Telecom to do over 70 years that there will be some issues as you make that transition. This is a once in 100 year transition, with everyone moving to a new network. With the issue of migration, there have been some issues. NBN and retailers have been working hard on those and there has been an improvement in the migration.

When it comes to the issue of speeds and the expectations that people have. There can be a number of reasons why people don't have the experience that they would be expecting. One is modems. Sometimes, retailers will send households the wrong modems, or the modems will be of poor quality. In-house wiring is also an issue for a number of households. But then there’s the responsibility of the retailers. Whether the retailers are purchasing sufficient capacity from NBN to service their customers. We have done a number of things to address that.

Firstly, we have charged the ACCC and given them money to embed 4,000 probes in premises. So they can publicly report on the real life experience that people are having in terms of speeds, and what retailers are providing. The ACCC has also given very clear guidance to retailers as to how they should advertise their products. 

The retailers haven’t always been doing a good job at that. And the ACCC has made it clear to retailers that if they don’t lift their game there, that they will come down on them like a ton of bricks. The Australian Communications and Media Authority is also embarked upon a research project to map out the customer experience. To identify the points where things aren’t going as they should.  I never want to diminish the experience that any individual has or any business has that is not all it should be. We are working hard to improve the customer experience. And the retailers have an absolute obligation to deliver for customers that which they promised.

JOURNALIST:

Senator, will the government take the NBN on to the budget as an expense item, given that the commercial rate of return for the NBN may not be commercial enough to justify it being kept off the budget?

FIFIELD:

The Government can’t unilaterally revalue the NBN. There are accounting requirements which the Government follows. NBN has a modest rate of return, about 1 per cent above the long-term inflation rate, that it seeks. Now, that is in an effort to cover its costs and to make sure it has the capacity, over time, as it’s needed, to develop upgrade paths for the network.

JOURNALIST:

The Prime Minister said it’s making a 3 per cent rate of return, which isn’t commercially viable, but enough to wash its face, so to speak. Given forecasts after interest rate rises over the next few years, do you think it will keep it off the budget bottom line as rates rise? If that rate doesn’t increase?

FIFIELD:

Well, NBN's internal rate of return is laid out. As I say, the accounting treatment for NBN in terms of valuation is something that is determined on the basis of facts.

JOURNALIST:

Minister, what Bill Morrow identified was the commercial relationship with Telstra. He has to pay a thousand bucks per premise. Then he has to collect 15 bucks from each customer. Are you willing or are you able to do anything about that?

FIFIELD:

They’re commercial arrangements which have been entered into between NBN and Telstra. The point that the Prime Minister was making is that our predecessors in the Australian Labor Party chose their own unique model to roll out the NBN. Whereas New Zealand is incrementally upgrading the existing network using the incumbent telcos and a mix of private and government money. The Australian Labor Party decided that they would establish a bespoke government-owned entity to roll out a new network and effectively to shut down the previous network. What that means is that NBN is required to make payments to other telcos who have facilities that they are required to use. So that is a function of the model and the path that our predecessors set us upon. It is a very different model to that of New Zealand.

JOURNALIST:

Bill Morrow suggests that the government will need to look at levying mobile broadband users to help cover the cost of paying for expensive connections like those we’ve seen today. Is the government looking at that, and, if not, might it?

FIFIELD:

Well, the government currently has, before the Parliament, legislation to establish a Regional Broadband Scheme. The purpose of that is to make transparent the existing cross subsidy that exists within NBN. Where all NBN customers pay for the non-commercial regional services. Fixed wireless and satellite. What this levy will do is to make that transparent. NBN customers will pay no more because they’re already, in effect, making that payment. What the levy will do, however, is apply the levy, for the first time, to that relatively small number of fixed line competitors of NBN. That is the proposition that is before the Parliament. When it comes to the mobile network, that is not something that is readily substitutability for the NBN in terms of the costs of data. It’s something that means that people will still focus on and need a fixed line network.  But we don't have a proposition to apply that levy to the broader mobile network.

JOURNALIST:

Minister could the government look to mandate that retailer service providers buy more bandwidth, so people actually get the speeds that are being advertised.

FIFIELD:

This is a matter for consumer law.  These retail service providers, under consumer law, are obliged to honour the contracts that they enter into with their customers.  And the ACCC has made it very clear that this is an area that they are looking very closely at. And that they will, as I say, move very quickly against retail service providers who are not doing the right thing by their customers.

JOURNALIST:

In hindsight, was it a dumb idea to privatise Telstra when you could use it to roll-out this network? Whereas countries like New Zealand have been able to use their Telcos.

FIFIELD:

The ownership status of Telstra as a Telco really isn’t directly related to what you would have as the structural arrangement for rolling out a national broadband network. What New Zealand did was a structural separation. And that is something that could occur regardless of the ownership situation. The difference between NBN and what has happened in New Zealand is, as I say, they are incrementally upgrading their existing network, using the incumbent Telcos on a structurally separated basis.

JOURNALIST:

Is the commercial rate of return part of the reason why the retailers aren’t buying enough bandwidth in the first place, because you are charging them so much money for the required premium, so they are just getting the bare minimum?

FIFIELD:

Retailers have an obligation to serve their customers and to honour the contracts that they enter into. That is the government’s expectation.  That’s the ACCC’s expectation. The CVC charge which NBN levies to retailers isn’t something that is set in stone. NBN has already reduced that on three occasions. NBN is currently reviewing that charge. So that’s something that does alter. But retailers and wholesalers will always be in a situation where they are discussing pricing.

JOURNALIST:

Minister the Prime Minister seemed to suggest this morning, or seemed to agree this morning, that the NBN was a mistake.  Do you see it just as a badly executed plan or do you think that the whole notion of going for a major high speed broadband network in 2009 was wrong to begin with.

FIFIELD:

No one is against the concept of an Australia wide fast broadband network.  And the Prime Minister was very clear that he is in favour, and always has been, for a national broadband network. His point, and my point, is that the Australian Labor Party came upon, and put forward, a bespoke model which was flawed.  And you only need to look at the data that was released today.  That showed that under Labor’s theological approach to the NBN, where it had to be fibre to the premise, in basically all circumstances, you had some premises which were costing $91,000 to connect.  That’s a flawed model.  That’s an unsustainable model.

And I do need to whack on the head, again, the fact that the multi technology mix approach that we are taking is one that is used throughout Europe.  It is one that is used throughout the United States. In Europe, in the US, what they do is they use the technology that makes sense in a given area, to see broadband delivered fastest and at lowest cost. We heard a bit, probably about six or eight months ago, about Google Fibre.  How Google Fibre were apparently going to fibre up to the premise whole US cities.  Google Fibre have given that away because to fibre up every premise in an area is cost prohibitive and takes a long time.  So the approach that we are taking here is the same as the US and the same as Europe when it comes to using a range of technologies.

[ends]