JOURNALIST: Good morning to you Senator.
WONG: Good morning, how are you?
JOURNALIST: Malcolm Turnbull had to duck off for 25 minutes.
WONG: I know, I know. I have been waiting to get on and unfortunately the bells for the Senate have just gone. I will have to try to see whether I can stay out.
JOURNALIST: The Business Case outlined yesterday, finally it appears now that the National Broadband Network has pledged to pay back, according to The Australian, $27.1 billion in taxpayer funds.
WONG: What the Business Case shows is a number of things. It shows first that the overall cost of this nation building project is less than we previously thought. It shows that the National Broadband Network can be financially viable. It will give affordable prices to consumers. It shows that this is a project that stacks up. And it shows the value of the Telstra deal.
There has been a lot of movement and colour about this issue. But fundamentally what we are talking about is an enormous economic reform. An economic reform that will mean an investment in productivity, jobs and growth.
JOURNALIST: OK. But up until now weve had the figure of $43 billion. Thats the all up cost, is it?
WONG: This is what is called capex or capital expenditure and that was what was estimated in the Implementation Study; the very extensive Implementation Study that the Government has already released and put out publicly. But of course since that time there has been the agreement with Telstra the Heads of Agreement which involved what we call the structural separation of Telstra.
One of the problems weve had in Australian telecommunications, one of the reasons why weve had a second best system for many people, is that we havent had sufficient competition. Weve since seen NBN Co National Broadband Network company and Telstra enter into a Heads of Agreement. And what we see in the parts of the Business Case which have been released is that that agreement means that the cost of this nation building project will be reduced.
JOURNALIST: So it was $43 billion. What is it now?
WONG: $35.7 billion is the number in the NBN Business Case that was released, the aspects that were released yesterday.
JOURNALIST: OK and as well, you are paid back money over the life of the project. Is that right?
WONG: Well thats right. I mean
JOURNALIST: How much will you be paid back?
WONG: Well that depends ultimately on how much revenue is achieved from the network. But just in terms of the network
JOURNALIST: Whats the estimate?
WONG: Are you talking about the next 100 years or the next 20 years? What the NBN Co Business Case says is that the rate of return, which is how you look at the revenue coming back over time, will be above what the long-term bond rate is. So were saying that this project is financially viable and over time it will create this rate of return.
Can I just explain something about this, and its very important. Why is it were doing this? Were doing this because we know from years of experience, and because of the studies that the Governments previously released, that the private sector is not going to build this. Because the private sector wants returns over a shorter period of time.
It is true this is a project with lengthy timeframes because it is the roads and rails and ports of the 21st century. But the important thing about the Business Case is that it demonstrates this is financially viable and will return money to taxpayers.
JOURNALIST: OK to make sense of all this, The Australian is reporting $27 billion will be reimbursed to taxpayers. Youre saying the project is now going to cost $35 billion. Does that mean it will end up costing us about $9 billion?
WONG: No, the figures youve described are different bits of the project. $35.7 billion is the current estimated build cost, the capital expenditure. In the early years, what we estimate is that taxpayers will invest around $27 billion. But the remainder would be NBN Co raising its own debt, just as Woolworths and BHP and companies like that raise their own debt.
JOURNALIST: Thats covered by taxpayers though, that debt?
WONG: No, no, that debt is private sector debt. Thats debt thats raised from private capital markets. But then remember, over
JOURNALIST: But it will be owned by, it will be borrowed by the National Broadband Network.
WONG: Which is a business enterprise
JOURNALIST: Owned by the taxpayer.
WONG: Owned by the Government. But this
JOURNALIST: Same thing.
WONG: Well its not actually. Its slightly different because there are a number of companies.
JOURNALIST: Well, there are some babies now who dont pay taxes. Fair enough, but...
WONG: No, no, Australia Post and other government business enterprises they enter into commercial arrangements on a regular basis. But look, what we
JOURNALIST: The debt is on the books somewhere, isnt it?
WONG: And the debt is to finance a very important project, which remember ultimately there are two points about this. Point one is
JOURNALIST: Before you go on, can I just what is the critical mass of subscribers that you need to get to? Theyre saying 8.3 million customers. Is that right? In other words, to get this money back the $27 billion in taxpayer funds an equation starts to look OK when you start looking at those figures. You do need to sign up 8.3 million customers.
WONG: Of course NBN has had a look at the sorts of projections around take-up, around the number of people who will sign up. Thats logical. But I have to say, Matt, and I was listening to you going down to Parliament to twitter, which is not something that wouldve happened before. If you think about the last ten years, and the extent to which services which rely on telecommunications have expanded in our lives, in our businesses, in our work and in our homes, you would have to say that this is likely to keep going at a very, very high speed.
JOURNALIST: Can I say, on that point, we have a number of people calling us about this. Ill be doing that on a laptop with a $30 pre-paid USB stick. And I wont have a fibre optic cable coming into it. And even if there was a fibre optic cable coming into a box somewhere in Parliament House, youd still be relying on a little wireless modem, which slows it right down. So you can make it as cheap or as expensive as you want, Penny Wong.
WONG: I suppose it depends on how you think of this. I mean, we think about this, as I said, as the infrastructure of this century. Fibre transmits at the speed of light. The limitations on fibre and where we will undoubtedly see more products, more services, more innovation, is at either end. And Im sure well see that.
But the point here is this. Do we want access to an infrastructure which enables not only some of the services were starting to develop and were starting to know about, but some of the things in the future which as yet, havent yet been conceived because we havent had this technology?
Just for example, as the Prime Minister announced in the election campaign, the tele-medicine opportunity whereby you can use the capacity of broadband to provide medical services in peoples homes which would reduce costs and help consumers.
JOURNALIST: Malcolm Turnbull was on early AM at AM this morning saying, look, this document that was released yesterday basically he was saying theres not a lot in it. And he said its not hard to find start-up businesses with very positive looking business plans. The bankruptcy courts are livid with a company which began with a very positive business plan. Its the actual detail in this document thats lacking. WONG: Well look, I do feel for Malcolm in this because I think Malcolm understands the importance of some of the Governments reforms. But hes been given one brief by Tony Abbott and that is to destroy this reform. I mean, Mr Abbott has made very clear that he wants to wreck, block and oppose this reform.
JOURNALIST: Hes also made it quite clear that if you refer this to the Productivity Commission and the Productivity Commission endorses this, then hes quite happy to be swayed.
WONG: Tony Abbott has not said that.
JOURNALIST: No, Malcolm Turnbull has.
WONG: Yes, but Malcolm Turnbull
JOURNALIST: Youre questioning Malcolm Turnbulls bona fide. Hes saying that if youre brave enough to refer this to the Productivity Commission and get an independent look at it, hell back it.
WONG: Well I make a few points about that. Ive negotiated with Malcolm Turnbull as you might remember quite famously about a year ago. And he did give his word and he was rolled by Tony Abbott. I think Tony Abbott has made absolutely clear as has Barnaby Joyce that this is a political response and a political opposition.
JOURNALIST: Why wont you refer this to the Productivity Commission?
WONG: Because we have already done and let me take you through it a committee of experts, which released the first report. A $25 million implementation study which was released by the Government and trawled over by the Opposition. We now have a Business Case. We will also release that after the Government has made various decisions and when we take into account commercial and market sensitive information and weve released a summary of that today. We have also agreed to a parliamentary committee oversighting this to ensure the roll-out is done in accordance with Government policy and done effectively.
Now this is an enormous amount of information, an enormous amount of oversight, and an enormous amount of consideration. The reality of Mr Turnbulls position is that this is simply yet another delaying tactic on a project that is of importance to the nation. Really, I think some of Senator Xenophons comments today in the media demonstrate that. Theres a bigger picture here.
JOURNALIST: Youre listening to us discuss the National Broadband Network. Its a big spend, to use the Government and corporate speak. Penny Wong is with us. Were hoping Malcolm Turnbull who we originally planned to talk to, hes been called away to a division in the chamber can join us. Its fair to say his office werent that happy that were also going to be talking to Penny Wong.
Martin from Salisbury East, good morning Martin.
CALLER: Good morning Senator, good morning Matt. Look, the amount of people that theyre saying need connected to the (inaudible), its the same amount as every living person in Australia thats over the voting age. Everybody I know, apart from the odd businessman, has wireless. We have tablets, we have iPods. Who is going to bother signing up? Where is the 8 million people going to come from?
JOURNALIST: Penny Wong?
WONG: What I just say is this: that part of the agreement with Telstra is to migrate its network, its capacity to the National Broadband Network company. There are a range of services to be offered. Some of them are at the basic level, so this is telephony, services probably at the higher end of what we receive now, but not at the higher end of where this technology will go.
But I just ask people to consider where weve come in the last 10 years when it comes to telecommunications. The way in which computers, the internet, those sorts of communication capacities have transformed our lives and our work. For example, just in my job we have telepresence capacity in the Commonwealth. Thats changed how we operate.
JOURNALIST: What does that mean?
WONG: Its like a meeting where you go to a room and there is a very high speed connection with another room in another city and its almost as if youre sitting around the same table. So you have full images of everybody. You can talk to them as if you are in a meeting. I have used that as a Minister on many occasions where I have had people in different cities, we want to have a meeting and we dont want to fly five or six people to the same city. So we have a meeting to transact a whole range of information. The productivity benefits of that are very substantial. Now we would not have thought of that ten years ago and I think thats the issue here.
JOURNALIST: Now when we are talking about signing up 8.3 million customers. Most people are not going to be doing that, are they? They are going to be either placing their AFL footy tips, downloading music, looking at porn, I mean
WONG: Oh really!
JOURNALIST: Well Penny Wong, you know
WONG: Matt, what would you like to tell us mate?
JOURNALIST: I think as a realist youd know that is one of the, you know, its one of the main downloads on the net, is it not?
WONG: Look, I havent looked at the figures on that in recent days. It has not been front of my
JOURNALIST: You only read the articles, you dont look at the pictures?
WONG: (Laughs) What would you like to tell us, dear?
JOURNALIST: Im not telling you anything! Im not telling you anything you dont know! Penny Wong
WONG: Were also talking about phone services here. Most people have a phone and 10 years ago how many people had mobile phones? Or 15 years ago?
JOURNALIST: But the Government didnt set up a mobile phone network, did it?
WONG: No and look whats happened. Thats a very good question, thats precisely the point. The Government didnt get involved in the way arguably it should have and how it structured the market and we have one of the slowest broadband capacities in the world by OECD standards. Weve had a second rate service for most Australians.
And in part that is because of the very problem that the Government, if this legislation today gets through, is fixing. And that is, we have had a monopoly, which is Telstra, a virtual monopoly, vertically integrated so they had a network and they were a retailer.
We know what we need to do is we need to separate those two functions out so that we can get good competition at the retail end. So customers can get better services, better products at better prices. And then we need to build a better network than weve got.
JOURNALIST: Penny Wong, thank you.
WONG: Good to speak with you.
ENDS