Appropriations Bill

Mr FLETCHER (Bradfield—Parliamentary Secretary to the Minister for Communications) (20:54): I am very pleased to rise to speak on these appropriation bills.

In the time available to me I would like to speak about important public policy considerations regarding value for money and sound public administration when it comes to the area of broadband and communications. This is an area where truth and honesty are enormously important. Unfortunately and regrettably for the people of Australia, it is an area which for most of the last six years has been in the hands of the former minister for broadband, Senator Conroy. It was a richly ironic spectacle to see that same man last week while asking questions in the estimates process in another place slam the table and say, 'Can't you handle the truth?' That was the question asked by Senator Conroy. Those who have watched the inglorious period in which he has had custody of broadband and communications policy in this nation would say to themselves, what a rich irony indeed that this man should be saying, 'Can't you handle the truth?'

Let us have a look at some of the more inglorious moments in the Conrovian approach to public policy, if I can appropriate for present purposes the adjective which the Minister for Communications has appropriately coined and which has become a byword for public policy incompetence. Let us look first at the Conrovian promise regarding the original fibre-to-the-node network when in March 2007 the then shadow communications minister promised to build a fixed broadband network using fibre to the node to deliver a speed of 12 megabits per second to 98 per cent of Australians. He promised it was going to cost a mere $4.7 billion of public money and it was going to be done in five years. What was the status five years later, five years after that March 2007 promise? By March 2012, far from reaching 98 per cent, Labor's broadband policy had delivered fixed broadband services to less than one-10th of one per cent of the targeted 10 million premises. In fact, its fibre network had a mere 2,315 services in operation, five years after that Conrovian promise of March 2007.One of the more extraordinary Conrovian claims is to be found in a speech made by the then shadow minister in September 2007 in the Senate in which he said:Labor's carefully costed fibre to the node network is based on a detailed calculation of the number of nodes required to reach 98 per cent of Australians. This includes the number of upgrades of exchanges and pillars internodes that are required.Anybody who has even a passing acquaintance with the inglorious history of this extraordinary public policy disaster will know that the claim that the then shadow minister had carefully costed his fibre-to-the-node policy is, on a charitable description, heroic. In fact, the true cost of this network was always going to be vastly higher than the $4.7 billion figure because the then shadow minister used a figure which was taken from a 2005 proposal made by Telstra that, for $4.7 billion of government money plus its own money, Telstra would upgrade its network to deliver 12 megabits per second to 98 per cent of premises.But there are at least two crucial reasons why that figure was incorrectly, inaccurately and inappropriately used by the then shadow minister. Firstly, Telstra's figure was a request for a subsidy. There was certainly no intention on the part of Telstra that in exchange for the $4.7 billion government would get an ownership stake in the network, as the Labor policy in 2007 assumed. Secondly, the Telstra 2005 proposal did not involve fibre to the node to 98 per cent of premises; it involved a mix of existing and new networks and technologies which would have been very materially less expensive than the Conrovian model of fibre to the node to 98 per cent of premises.The flaws and inaccuracies in the Conrovian model were revealed once he tried to implement it. His intended private sector partner was Telstra but Telstra refused to participate in the plan, and so in April 2009 the then minister by this time abandoned his first plan and announced his second, now to be a fibre-to-the-premises network to 90 per cent of premises with wireless and satellite to the rest, and the cost would be $43 billion. So let us assess what he promised in March 2007 and what he delivered. He promised the new network would be substantially private-sector funded with public funding capped at $4.7 billion. In fact—

Debate interrupted.

Mr FLETCHER (Bradfield—Parliamentary Secretary to the Minister for Communications) (19:43): When my remarks on these appropriation bills were interrupted last night, I was addressing the importance of truth and honesty when it comes to public policy in the area of broadband. Against that backdrop I was assessing the conrovian track record. I was coming to the point that there is a troubling disparity, a yawning gap, a chasm in fact between what was promised by the then shadow minister in March 2007 and what, as Minister for Broadband and Communications Senator Conroy delivered during the years of the Rudd-Gillard-Rudd government. There was a promise that the new network would be substantially private-sector funded with public funding capped at $4.7 billion. In fact once in government what the minister began building, after a new announcement in 2009, was a 100 per cent taxpayer-funded and government-owned network. The total cost, far from being a public contribution of $4.7 billion, was on track to be, based upon the strategic review prepared and issued by the board and management of NBN Co in December 2013, well in excess of $70 billion.

The shadow minister, as he then was in March 2007, promised a competitive selection process. He hopelessly mismanaged that selection process before abandoning it in disarray in early 2009. He promised a fixed network to 98 per cent of the Australian population but that, of course, changed to a plan in which the fixed network was going to reach a smaller percentage of the population. In 2007 Labor's broadband policy document promised that the party would 'turn around Australia's broadband performance and put Australia back into the fast lane of the information superhighway'. It was a promise that was dismally unfulfilled at the point when Labor government left office in 2013.

I want to turn next to another conrovian promise—that regarding broadband penetration. We heard when Senator Conroy was shadow minister that the policy problem that this new network was going to solve was that of Australia having poor broadband penetration. In 2005 he claimed that Australia's ranking of 21st on the OECD broadband penetration statistics was 'an appalling result'. In 2006 he was fiercely critical of Australia's ranking of 17th in the OECD broadband rankings, stating in a media release:

The latest OECD broadband statistics show Australia's ranking in the use of broadband remains mired at 17th out of 30 surveyed countries.

He claimed this was due to the Howard government's complete lack of broadband infrastructure leadership.

Oddly, once in government his tune changed. We had a press release on 7 December 2010, titled 'Latest OECD statistics reinforce the need for the NBN', after Australia dropped to 18th out of 31 countries on his watch. There was a similar line in 2012 when the latest OECD broadband rankings reinforced the need for the NBN. So this minister, as he then was, was like a medieval doctor applying leeches to a patient and, even as the patient failed to get any better, he claimed more leeches would solve the problem. When we look at the historical record as at 30 June 2013, after almost six years, Australia was ranked 18th in broadband penetration. I make the point that broadband penetration, and indeed the OECD rankings, are frankly a deeply simplistic measure, but it was the measure that then Minister Senator Conroy repeatedly said was the one by which his policy performance should be judged.

I want to turn to another area where there is a yawning gap between the conrovian promise and the reality. That was the dissembling about whether the expert panel, which was established to assess bids in the competitive selection process in 2008, had recommended that the reason the selection process should be ended was that fibre to the node was not the way to go and fibre to the premises was the future. This was the claim we heard from the then Labor government. What did the then Prime Minister, Kevin Rudd, say in a press conference in April 2009? He said:

The recommendation from the panel is that we move to the next generation, not fibre optic to the node, but fibre optic to the home, fibre optic to the business, fibre optic to the premise.

It was a very clear claim from the then Prime Minister that the reason Labor abandoned its fibre-to-the-node policy and moved to a fibre-to-the-premises policy was a recommendation from the expert panel.

It is interesting that what emerged a little later on—as was highlighted by the then shadow minister for communications, Senator Nick Minchin, in a media release was that Professor Rod Tucker, who was a member of that expert panel, told an Alcatel-Lucent forum in 2009:

I just want to make one thing clear: the panel of experts was never asked to and didn't make any judgement call on the issue of investment for a fibre to the home network.

In fairness, I must note that Professor Tucker subsequently claimed these particular comments of his were taken out of context, which of course is the usual thing you say when you have been reported accurately but what you have said is politically inconvenient. The reality is that the claim from the previous government that the abandonment of fibre to the node and its replacement with fibre to the premises was based on the advice of the panel is a heroic claim not supported by the evidence.

Let's also look at another conrovian promise, where there was a yawning gap between what was claimed and what actually happened. This was the repeated promise that there was going to be substantial private sector investment in this national broadband network. Indeed, the original plan—the fibre-to-the-node plan—collapsed in ignominy and so we had the announcement in April 2009 when Senator Conroy had this to say:

We are inviting all companies in the Telco sector to join us and partner in this … And in terms of our initial contribution it is the $4.7billion which we have talked about at length over the last few years. So we believe that we are able to deliver this project very responsibly and we believe that there is genuine interest in being a partner in this proposal.

That is to say, genuine interest in private sector investment! Sadly, it very quickly emerged after KPMG and McKinsey prepared the $25 million implementation plan at the then government's request, that there was no interest at all from the private sector in investing in such a hopelessly uneconomic venture.

Let me turn to another yawning gap between the reality and the conrovian claims. We had one of the former minister's less glorious moments—from quite a rich menu I might add—in February last year when as the Australian Financial Review reported:

Communications Minister Stephen Conroy has unleashed a tirade against Vodafone … accusing its chief executive of acting like Sol Trujillo, the divisive former Telstra boss.

The AFR quotes the then minister as saying:

'I find it extraordinary that the world's largest mobile operator wants to close down a regional network for people they don't service. They lost 750,000 customers due to poor service

In other words, it was a direct attack on the integrity of the company and an individual and, unfortunately, as we saw last week with Senator Conroy's behaviour, that sort of attack is consistent with his form when he wants to direct attention. His record on the question of policy and mobile communications is absolutely not one to be proud of. It is not surprising that he wanted to direct attention from questions that were being asked and policy suggestions that were being put about how to restore the vigour in competition in the mobile sector. That sector, which had previously had a proud track record of competition, saw that record, frankly, weakened materially under Senator Conroy's stewardship.

All of us who have watched Senator Conroy over many years certainly saw a rich irony in him observing last week in the Senate, 'Can't we handle the truth?' The question of truth is always an important one and there are some important questions here to be answered. (Time expired)