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2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
Infrastructure Australia Amendment (National Broadband Network and Other
Projects) Bill 2009
EXPLANATORY MEMORANDUM
(Circulated by authority of
Senator the Hon Nick Minchin)
Preface
This Bill amends the Infrastructure Australia Act 2008 to require that
Infrastructure Australia, in accordance with their existing functions,
examine the Government's proposal to build a national broadband network.
The Bill also amends the Act to allow for either House of Parliament to
refer any infrastructure proposal to Infrastructure Australia for analysis
and assessment in accordance with its functions.
General Outline
This Bill introduces a section 5A to the Infrastructure Australia Act 2008
to require that Infrastructure Australia provide advice about the
Government's proposal to establish a company to build and operate a
wholesale national broadband network.
Infrastructure Australia can utilise any of their already designated
functions specified in section 5 of the Act in the provision of this
advice.
Under the existing Act, Infrastructure Australia "has the primary function
of providing advice to the Minister, Commonwealth, State, Territory and
local governments, investors in infrastructure and owners of infrastructure
on matters relating to infrastructure."
Consistent with 5(1)(b) and section 5(2)(d) of the Act, Infrastructure
Australia's functions include assessment of "policy, pricing and regulatory
issues that may impact on the utilisation of infrastructure" and "to
evaluate proposals for investment in, or enhancements to, nationally
significant infrastructure".
The Government has claimed that the NBN is a significant infrastructure
project, and yet they refuse to allow a body they created specifically to
assess infrastructure projects to examine this proposal.
The Government initially announced that it would allocate $4.7billion to
build a fibre to the node National Broadband Network.
After 18 months and $20 million wasted on the flawed NBN mark one tender,
the project and Labor's election promise have now categorically failed.
The Government's initial proposal to spend $4.7billion on a fibre to the
home broadband network did not have any analysis or assessment through
Infrastructure Australia, or against Building Australia Fund evaluation
criteria, as the Government argued it was an election commitment.
The Government announced on 7 April 2009 that it would create a company to
build and operate a wholesale broadband network, a proposal costing $43
billion dollars.
This is no longer an election commitment, so there should be no flimsy
excuse standing in the way of a rigorous assessment of the proposal.
Labor's election commitment has been abandoned and this revised plan
represents a significantly greater risk to the taxpayer.
There has been no cost benefit analysis for the Government's $43billion NBN
take 2. Nor has the government provided any detail about the end price for
consumers should the wholesale network ever actually be built.
Labor cannot provide any detail about likely customer take-up rates or
prices consumers will have to pay to use the network.
Few analysts predict prices for retail services under the NBN can be less
than $100 per month - consumers will be forced to pay double what the
average broadband user pays today.
Concept Economics (chair Professor Henry Ergas), leading brokerage firm
Southern Cross Equities and the CEO of AAPT (Australia's third largest
telecommunications company) Paul Broad predict prices of $200 or more per
month.
We learnt during Budget Estimates that only $2.4 billion of the taxpayer
funding required will come from the Building Australia Fund, the rest -
which could theoretically be upwards of $40billion - will be funded by
debt.
Yet, despite the financial ramifications and the significant contribution
to debt levels, the Government has refused to rigorously examine the costs
and benefits of the proposal.
We all know that fast broadband speeds enhance commercial activity and
allow for health and educational opportunities and the Coalition fully
recognises the advantages of universal access to fast, affordable and
reliable broadband.
We also fully support the continued improvement of broadband services.
However, how can we be convinced that this proposal stacks up when the
Government refuses to provide any evidence and has refused to undertake a
cost benefit analysis of the proposal. Labor has already failed on
broadband, but the stakes are now much higher and taxpayers will carry the
bulk of the risk.
Schedule 1
Schedule 1 inserts into the Bill a new subsection 5A relating specifically
to the national broadband network and a requirement that it be assessed by
Infrastructure Australia in accordance with its existing functions and the
Building Australian Fund evaluation criteria.
A written report must be provided to the Minister for Broadband,
Communications and the Digital Economy and this Minister must cause the
report to be tabled in each House of Parliament.
This report must include details of the methodology used in the assessment.
The assessment of the NBN also include analysis in accordance with the
Building Australia Fund Evaluation Criteria.
Within 7 sitting days of receiving the report, the Minister must provide a
copy to both Houses of Parliament.
Schedule 2
Schedule 2 of the Bill provides a mechanism whereby in future either House
of the Parliament can refer a project to Infrastructure Australia in
accordance with the functions specified in the Infrastructure Australia Act
2008.
This would allow future projects - in relation to which the Government also
seeks to bypass its own infrastructure assessment body - could be referred
for assessment without a separate piece of amending legislation.
Financial Impact
This Bill will have minimal financial impact as assessing infrastructure
projects constitutes core business for Infrastructure Australia.