Mural Hall, Parliament House, Canberra
23 October 2017
E & OE
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.
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
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.
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
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?
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
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.
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.
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.
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.
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?
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.
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
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.
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?
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.
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?
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.
could the government look to mandate that retailer service providers buy
more bandwidth, so people actually get the speeds that are being
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.
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.
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.
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
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.
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.
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.
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.