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Press Conference: Interim NBN Co Statement of Expectations

24th September 2013  |  Comments  |  Blog, Transcripts

24 September 2013

TRANSCRIPT OF THE HON MALCOLM TURNBULL MP
DOORSTOP INTERVIEW
SYDNEY

Topics: Statement of Expectations on the NBN
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MALCOLM TURNBULL:

Well good afternoon.  Today we are announcing the first step to implement the Coalition’s broadband policy that will ensure we are able to complete the National Broadband Network sooner, more affordably for consumers and at less cost to taxpayers.  The Finance Minister Senator Cormann and I, have today issued an interim Statement of Expectations to the company as the first step in implementing these changes.  That interim statement will guide the NBN Co’s construction and operational activities pending changes to the Board and while a strategic review and independent audit of the project are carried out and while a new NBN Co corporate plan is drafted. 

The interim Statement instructs the NBN Co to continue to roll out the network as rapidly and as cost effectively as possible throughout this process.  In the short term, the interim Statement will see the NBN Co meet its contractual obligations by continuing to roll out fibre to the premises while the company conducts the strategic review of the project. 

The NBN Co I should note, has recently advised the Government that it is proposing to revise its rollout target for premises passed by fibre by 30 June next year down by almost half from the forecast made four months ago in June.  The interim statement provides the NBN Co with the flexibility to use a wider range of technologies to connect businesses and homes to the network.  For example, this will allow NBN Co to trial the latest VDSL technology to deliver superfast broadband to homes and businesses to multi-dwelling units, such as apartment and office blocks.

A key priority will be to reduce the backlog of 66,000 premises passed by the NBN Co network which can’t currently obtain a service.  This includes the majority of apartments, schools and businesses where the fibre network has been rolled out. 

Under the interim Statement of Expectations, construction will be completed in areas containing 300,000 premises where construction contracts have been signed.  Detailed network design work is underway in areas containing a further 645,000 premises. In geographic areas where NBN Co is in a position to hand over final designs to construction partners, some of these sites may see construction work begin shortly.
There are also more than 900,000 premises listed on the one year rollout plan on the NBN Co website where only preliminary network design work is underway. Decisions about actual construction in these areas will be taken after the reviews into the NBN rollout are completed.
These decisions will ensure there is a steady flow of work on the NBN until well into 2014. This will provide certainty for contractors and ensure they do not have to demobilize workforces.  We expect this period of review will lead to revisions to the timing of the rollout and to updated forecasts.  It is important to bear in mind however that the NBN rollout has, to date, repeatedly missed its targets.
It is our goal following the completion of the review and a new corporate plan to see the NBN Co set realistic rollout targets and then consistently deliver on them.  Do you have any questions?

REPORTER:

During the campaign you mentioned a statement of expectations for the NBN.  Is this the same thing?

MALCOLM TURNBULL:

This is the Statement of Expectations – yes that is the document the Government provides the NBN Co as to what it expects it to do.  And we have issued a revised Statement of Expectations, which as we have described today is an interim Statement of Expectations because it is set out to be pending the review.  And if I can perhaps take you through a few points there.   We’ve said here in this letter to the chairman, Siobhan McKenna, we advise the goals of the transition period should be:  One, to avoid service disruptions to consumers.  Two, minimize impact on the construction industry and employment with the objective of as smooth as possible transition to the new approach.  Three achieve the less costly and speedier rollout objectives as seamlessly as possible. 

And then in terms of continuing work, we have advised that the NBN Co should continue deploying the fixed wireless network but in doing so take into account the very likely availability of fixed line broadband technology by VDSL in smaller communities not currently in the fibre fixed line footprint.  These are communities with less than 1,000 premises.  Two, to continue the interim satellite service.  Three, to continue work associated with the build and launch of the long-term satellites.  To continue work and construction of the transit network and points of interconnect.  To continue the work of special services, enterprise services and so on.  And to continue to deliver fibre to new development areas.  That’s some of the key points of that letter.

REPORTER:

How long do you expect this strategic review to take?

MALCOLM TURNBULL:

Well our goal is to complete it within 60 days.  So that’s obviously 60 days from the change of management at the NBN Co.

REPORTER:

And who will conduct the review?

MALCOLM TURNBULL:

It’s intended that the review will be conducted by the company.  So it will be owned, if you like, by the board of the NBN Co and owned by the company.  But it obviously will have the input of experts and advisers.  But it’s not my intention to have a firm of consultants produce a review that is not owned by the people that then have to live with it an execute it,

REPORTER:

Is it true the board’s been replaced and if so, who is actually going to be there to do the actual review?

MALCOLM TURNBULL:

Well I’m glad you’ve asked me about that.  If I can just confirm to you that I did request, the Government did request, that the directors to offer their resignations.  And all but one did so.  They have not resigned, however, they are continuing as directors.  That request should not be regarded as criticism of any of the directors, least of all of its chairman Siobhan McKenna, who has done a very -- conducted herself in a very difficult job in very testing circumstances.  Or indeed of its chief executive Mr Quigley who, prior to the change of Government, tendered his resignation. 

The reason for that was simply to give the Government complete flexibility in remaking the board in light of its new policy agenda.  And those decisions about the board will be taken by the cabinet in due course.  And while I’m sure you will want me to tell you who I think is going to be on the board and speculate about all sorts of eminent individuals, I will disappoint you in that regard. 

REPORTER:

Siobhan McKenna is not likely to be in charge of the strategic review?

MALCOLM TURNBULL:

Let me – I’ve said all I am prepared to say about the personalities of the board.

REPORTER:

When will the new directors be appointed?

MALCOLM TURNBULL:

You can expect there will be changes made to the board by the Government in due process following the next – well it will be announced following the next cabinet meeting.

REPORTER:

It will be inside the 60 days review period?

MALCOLM TURNBULL:

Well the review period cannot begin until there is new – until there is a change of the board.  So the 60 days will start running from then.

REPORTER:

What about the person who is scheduled to get the NBN in the next, say, year.  Who is going to determine whether they will get the full fibre service now?

MALCOLM TURNBULL:

Well where construction is currently contracted – that is to say, construction, I mean building, physical work in the field – that work will be completed.  We will -- this is a company who is obviously in a period of transition.  There’s a lot of people who have been promised broadband services by the NBN Co in timeframes that have not been delivered.  So we don’t proposed to make any changes to that or any further promises or commitments until we are absolutely satisfied they are going to be correct. 

There is a big difference between telling people that you planning to deliver fibre optic connections to their houses and actually doing so.  And again, I’m not here to make criticisms of the NBN Co – there have been a lot of extenuating circumstances at differing times and it is a very difficult and complex project.  And I think the difficulty and complexity of it were probably underestimated at the outset.

But again, that’s not my job – the strategic review will be looking at all those things.  But this is a process of transition and we will keep Australians updated with the progress as more information comes to hand.

REPORTER:

In terms of the process, will you be using Egon Zehnder again to find new directors?

MALCOLM TURNBULL:

Well we will certainly be looking for new additional non executive directors.  That is true.  I don’t want to comment on the identity of consultants, particular consultants.

REPORTER: 

But you will be using some consultants?

MALCOLM TURNBULL:

Well, David, typically people do.  But again, that’s a – we have been looking very widely on the question of non executive directors and the company will no doubt look very widely at executives where gaps in the executive management need to be filled.  Obviously a new chief executive has to be hired.  And that will be a thorough search process.

REPORTER:

The operating costs have ballooned from about $500 million to about $1 billion in the past year.  On what basis was that, what was the main driver of that?

MALCOLM TURNBULL:

Look I don’t want to run a commentary on the NBN’s accounts at this stage.  We are going to conduct a strategic review to make sure that we have the most accurate and detailed figures about the state of the rollout and the financial state of the company.  So I don’t want to be giving a running commentary on the company’s numbers.

REPORTER:

Just on the releasing of the NBN reports.  Will the Government commit to releasing all future NBN Co reports or forecasts?

MALCOLM TURNBULL:

Well part of our policy is there will be – the answer is, we will ensure the NBN Co is as transparent or indeed more transparent than a publicly listed company.  We will ensure there are published weekly figures on the progress of the rollout.  And the – as I have said to NBN staff today, I’m not interested in getting information that people may think will conform to my particular political agenda – whatever they may imagine that to be.

We want from NBN Co. nothing more or less than the plain unvarnished facts. I’m not making any criticism of anyone here, by the way, let me be clear about that too. But what we need in the future is the facts. It’s always nice to get good news, I’m interested in the news, the facts, the true news, what’s actually happening. I’m not interested in just being given figures that people may imagine would conform with our agenda.

So this strategic review is going to be a very, very rigorous and objective exercise in getting to the facts of the matter so you know the goal of the strategic review is principally the following: to ascertain what it will really cost in dollars and what it will really take in years and months to complete the project on the current specifications and then to assess what options there are to reduce that cost and time by using different techniques, different technologies.

As you know, as everyone knows we’ve canvassed an example of that in our policy document, but let me say again, as I’ve said to NBN staff today, I am - and the government is - thoroughly open minded, we are not dogmatic about technology, technology is not an ideological issue, we are completely agnostic about it. What we want to do is get the best result for taxpayers and consumers as soon as possible.

REPORTER:

Are you contemplating expanding the interim satellite solution longer term and will that factor into this interim report.

MALCOLM TURNBULL:

That no doubt will be considered in the course of the strategic review but I don’t want to pre-empt the work on that.

REPORTER:

Will you release the 23rd of June 2013 Draft Corporate Plan?

MALCOLM TURNBULL:

Well it was released to the Australian Financial Review apparently so that’s where we learned about it! So I see your colleague from the AFR has got the broadest grin!

REPORTER:

Will you release it?

MALCOLM TURNBULL:

It’s essentially of historical interest only and I think what we’ll do, I mean it literally is of historical interest only because it has been superseded by events. But I don’t see much downside in doing that but let me say once the changes to the board have been made we will speak to the company about that. But my preference, my bias, is to be completely open about this. If there’s anything in it that’s newsworthy then it’s been pretty well picked over already.

REPORTER:

So the new directors, I know you don’t want to name any personally, what type of skill sets are you looking for in a new director?

MALCOLM TURNBULL:

Well David, I can only go back to what I’ve said I have never criticised any of the individuals on that board. They’re all very capable people and the work they have done we owe them a debt of gratitude for that. But in terms of a board for a project like this certainly telecommunications experience, management experience, experience in the construction of linear infrastructure is clearly very relevant. Those two particular backgrounds were not present among the directors of the NBN Co. the Labor party assembled.

You know, they’re all very good people but it’s a question of getting the right mix and getting the right chemistry. So bear with us, it’s early days, just watch this space and the Cabinet will make some decisions about this shortly.

REPORTER:

At what point do you start talking to Telstra about getting access to the copper network?

MALCOLM TURNBULL:

Soon, and we’ve already had preliminary discussions but again, that’s something that we’ll begin in earnest once we have a new board and some new management and we’re able to assemble the NBN Co. slash Government team to enter into those discussions.

REPORTER:

There were some major concerns from contractors over the past year or so about not being able to speak publically, being gagged, will the government or NBN Co. change it’s position and allow contractors to speak to the media if they have problems or issues or will it take action if it is being threatened.

MALCOLM TURNBULL:

Well we’ll review that with management. There are often confidentially clauses in contractor’s agreements which of course protect both sides but that’s something we’ll certainly look at. Again, I am the communications minister, I’m not the new Chief Executive of NBN Co. I recognise that if and when things go wrong the blame will stop with me, I understand that, I know I’ve got the ultimate responsibility for that but I don’t want to be making on the run decisions that are really a matter for management. But our commitment is, our focus is, to have a much greater level of transparency and openness. I know there’s a lot of politics associated with the broadband issue but much more than there ever ought to have been and there’s been a huge amount of misinformation and spin about broadband and what various technologies can offer and so my focus and my commitment is that we deal in fact. Fact, not fiction, no more spin, fact. That’s what Australians need to know so they can make informed decisions.

REPORTER:

[Indistinct]

MALCOLM TURNBULL:

That will be one of the reviews and that will be initiated shortly.

REPORTER:

And who do you want to do the review?

MALCOLM TURNBULL:

That will be a decision for the Cabinet and we’re certainly looking at options so clearly it’s got to be an independent inquiry. We’re looking at a number of different options for that.

REPORTER:

So who do you expect to do that?

MALCOLM TURNBULL:

I’ve just told you, we’re looking at different options for that and obviously different individuals but that’s something that will be announced in due course. As Tony Abbot has said many times, we are going to operate a very traditional Cabinet Government. This is not going to be like the Rudd and Gillard Governments where decisions are plucked out of thin air and on the run so establishing an inquiry like this is a decision for the Cabinet, I will take a submission to Cabinet in due course and that will be discussed with my colleagues and we will make a decision, it will be a collective decision of the government. It’s not something I’m in a position to announce but you can be guided by our policy which we said, it will be an independent inquiry. Ok, just one more perhaps?

REPORTER:

The recent update that NBN Co. gave you there’s a table provided, are there any other figures any costings?

MALCOLM TURNBULL:

There are some other figures but I would not have the confidence to provide you with cost figures about connection costs, there’s a degree of uncertainty about what it is actually costing NBN Co. to pass and connect premises and this is one of the things we’ve got to get to the bottom of so I’m can’t stand here and warrant to you figures of the NBN Co. the reason we’re having a strategic review done is so we can be absolutely rigorously satisfied that the numbers that NBN Co. is producing on behalf of the government which is of course its shareholder is absolutely accurate.

REPORTER:

What’s that disparity based on? Why do you think NBN Co. may not be [indistinct].

MALCOLM TURNBULL:

Jake, I really don’t want to go into this, it’s a long debate, it will be subject to the strategic review, I know everybody wants me to pre-empt the work of this review but we’ve got to have respect for the board as it’s reconstituted and new management and the work that they’re going to do so again, my message to the NBN Co. now and in the months ahead is that what we want is the plain, unvarnished facts.

We want to get to the facts, the truth of the matter, we want to know what this project is really going to cost and how long it’s really going to take and we want sensible, prudent, conservative estimates not numbers that forecast that look good at a press conference then fall away a few months later when it’s realised they can’t be reached. It’s got to be a lot less politics in this project and a lot more hard headed, practical business and management.

That’s what we need, I know I’m a politician but my commitment is to make this project as non-political as possible so we make our decisions as rational people would based on cost of deployment, time of deployment, service level offered by different technologies, what utility they have to consumers what they’re prepared to pay for them and all of those obvious criteria that tend to get lost in the waves of often, I have to say, ill-informed commentary, that I’m afraid to say the previous government contributed and amplified that misinformation mightily. Ok thanks --

REPORTER:

You must appreciate you’re talking about the plain unvarnished facts, you’ve released one set of figures but another set of figures --

MALCOLM TURNBULL:

Well what figures do you want to know?

REPORTER:

You’re talking about the connections and the cost --

MALCOLM TURNBULL:

I do not know what it’s costing the NBN Co. to connect premises. I do not know Jake. I do not know what those figures are and that is what the strategic review will find out. You’ve basically asked me to tell you what the results of the strategic review will be and if I knew the answer I wouldn’t have the review. So on that note, a penetrating glimpse of the obvious as my father-in-law would say, I will bid you all a good afternoon. Thanks very much.

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