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Transcript - Radio 2GB - 15 July 2013

15th July 2013  |  Comments  |  Transcripts

15 July 2013

TRANSCRIPT OF THE HON MALCOLM TURNBULL MP
INTERVIEW WITH ALAN JONES
2GB RADIO

Topics: National Broadband Network; Kevin Rudd
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ALAN JONES:

He’s on the line Malcolm Turnbull good morning.

MALCOLM TURNBULL:

Good morning.

ALAN JONES:

Goodness me, what’s happened to Quigley?

MALCOLM TURNBULL:

Well we know that for some months the chairman Siobhan McKenna has been seeking his removal, seeking to persuade Conroy that he should be dismissed or terminated and he has now left.  So I think the fairest assessment, the most generous assessment would say there’s been a lot more pushing than jumping in this departure.

ALAN JONES:

If you’re the Minister will Siobhan McKenna go?

MALCOLM TURNBULL:

Alan I don’t want to comment on individuals but I’ll just say this:  One of the remarkable things about this board and indeed about Michael Quigley you could make the same comment about him, is that there is none among them who have had any experience in managing a large telecommunications company or building a telecommunications network.

Now if you are assembling, in the business world, if you are assembling a board to do a project like this which is the biggest telecoms network construction project in our history, if you are assembling a board to do that you would obviously get people who have done it before or had relevant experience. The person with the most relevant experience on that board is Dr Kerry Schott who ran Sydney Water. She’s familiar with large construction projects.

ALAN JONES:

But I find it hard to believe this woman, Siobhan McKenna, apparently has hired a lobbying firm, Bespoke Approach, to lobby members of your party so that if there were a change of government the jobs of the directors of NBN will be secure. That’s unheard of surely?

MALCOLM TURNBULL:

Well I’ve never, there are a couple of points about that Alan. I’ve never heard of the board of a government business enterprise like this hiring a political lobbying firm to represent the board, not the company, but the board itself. As far as I’m aware that’s unprecedented. Secondly shouldn’t the directors be paying for this?

ALAN JONES:

Yes quite.

MALCOLM TURNBULL:

Directors should not be spending the company’s funds other than in the best interest of the company. Now this is a company that belongs wholly and solely to the people of Australia, it has one shareholder, the Government. What on earth do the directors think they’re doing hiring a lobbying firm – however estimable and capable – to be representing her and her director colleagues? Again I’m baffled by it. There is so much about the NBN that is baffling.

ALAN JONES:

It is. You will as I understand it be issuing a strategy report to try to determine what on earth should be done because you are going to inherit a mess.

MALCOLM TURNBULL:

That’s right. Well as I always like to say we’re like the fellow who gets lost driving around the little lanes of Ireland and who walks into the pub and says to the barman can you give me directions to Dublin? And the barman says well if I were you I wouldn’t be starting from here. So we wouldn’t be starting from here either. So the first thing we’re going to do is assess in a hard headed objective way how much it is really going to cost in dollars and years to complete this project on the current specifications.

Now our estimation, which by the way nobody has been able to contradict, no one has said you’ve got the numbers wrong, our estimation is very conservatively is that this will cost not $44billion which is bad enough but $94billion. So we’ve got to nail that and we’ve got to –

ALAN JONES:

But everywhere you read you see by the apologists in the media they talk about a $37billion rollout. Everywhere you read about broadband.

MALCOLM TURNBULL:

Well that’s a nonsense figure, that is just not realistic. Even under the Government’s own figures Alan their peak funding requirement is $44billion, we say it’s actually $94billion. But then the second thing we’ll do, having done that, is set out clearly and transparently what savings we can make in time and dollars by making certain changes, including those that we’ve nominated in our policy.

And the Government says the Labor Party and people in the media say the Coalition doesn’t have any policies. The broadband policy is about 60 pages, it is all on my website malcolmturnbull.com.au, it’s on the Liberal Party’s website liberal.org.au, it’s full of numbers and detail and even Mike Quigley had nice things to say about it when he resigned.

ALAN JONES:

You’re talking about ‘optionality’.  Can you just explain that to my listeners?

MALCOLM TURNBULL:

Well what I mean by optionality is that when you’re in a time of rapid technological change, you don’t want to put all your eggs into one technological basket any earlier than you need to.  See what some people will say is, Malcolm you know that what you’re proposing – the build you are proposing, which is not taking fibre into every house and not disturbing everybody’s garden and not drilling holes in everybody’s walls but taking the fibre further into the field so that it’s within a couple of hundred metres from everybody’s home.  That’s fibre to the node.  And we say that is the best approach. 

And some people will say, Well Malcolm that may be good for today and the next 10 years but what about 20 years’ or 30 years’ time?  And I’ve got two responses.  One is, we don’t know what the demand is 20 or 30 years’ time from now and if you think you do you are kidding yourself.  And more importantly, if we are going to invest in infrastructure to deal with the demands of 20 years’ time surely we should do it closer to that date, when we will be buying the technology of 20 years’ time.  Which will no doubt be better and more efficient and have capacities we don’t have today. 

Because you see this is not like building a bridge.  Some people will say, this is like building the Harbour Bridge and we wouldn’t build the Harbour Bridge with one lane. Well you wouldn’t.  But a telecommunications network evolves.  And it is built up and expanded every year so that you’ve got that luxury that you can invest no more money today to meet the demand of today and the foreseeable future; and then in 10 years’ time you can make another investment and another investment.  And so you can add to it incrementally. 

And in that way, you are positioning your flexibility.  I mean, we have not assumed in our business plan that we would use wireless for the last few hundred metres.  Even though it is clear that that is a coming technology.  And that is because –

ALAN JONES:

And then for the bush it would be satellite?

MALCOLM TURNBULL:

Well satellite is in the plan.  But the point is when you are making decisions in times of uncertainty as you are particularly with technology, you have to preserve as much flexibility and options – and hence, ‘optionality’ – and that’s what business people do.  But the problem with Labor Party in Government is that – and you have described Rudd’s many failures earlier – they have demonstrated again and again they simply cannot manage anything.  They are un-businesslike.  I haven’t checked through Rudd’s current cabinet, but in Gillard’s last cabinet there was not one person who had ever been in business –

ALAN JONES:

No they’ve never paid out a payroll –

MALCOLM TURNBULL:

Other than Peter Garrett.  I don’t know if he did the books for Midnight Oil, but he’s the only person –

ALAN JONES:

They’ve never filled out a payroll slip.  Can I just come back to your point about the fibre to the node which is out there on the road.  This leads to another massive problem and I would be interested in your comments on it, because under the $11 billion deal that secured Telstra’s involvement in the NBN Telstra agreed to make its network of cable ducts and pits available and that shaved $6 billion off NBN’s original cost estimates.  But of course some of these are more than 60 years old.  And now we find that there’s a problem with asbestos.  How is this going to be resolved?

MALCOLM TURNBULL:

Well in terms of our plan, the virtue of the fibre to the node approach is that there is very little disturbance of the existing copper network in that last few hundred metres.  You have to remember Alan – Labor tries to set this up as copper versus fibre.  Remember this: If you take a typical exchange, you’ve got a run of say 3 kilometres, 300 metres, to the pillar box in the street and then say 4- or 500 metres to your house.  It could be a lot less than that of course.  We’re replacing with fibre that whole 3000 metres. 

So we’re replacing almost all of the copper and the only reason you don’t replace that last couple of hundred metres is because that is about three-quarters of the cost.  And a huge amount of disruption. 

You see, I was doing a forum on this up in Queensland the other day and there was a lady who was talking about her mother, who just uses the telephone.  And she has been told – she’s very upset – because she’s been told they’re going to bring fibre optic cables into her house, drill through her wall, install new electric devices into her property and that is the service she is going to have to have. And she says, ‘well, I don’t need that, I don’t want to have my garden dug up.’

The virtue of our approach is that you don’t have to do that. Nothing changes in the customers house. If you want to use the very fast broadband, and we’re talking about speeds for most people of over 50 megabits per second – so screamingly fast connectivity – then your retail service provider, Telstra or Optus, will send you a new modem which you just plug in and away you go.

See the approach we’re proposing to take is not sort of an innovation of mine, this is what British Telecom has done, it’s what Deutsche Telekom is doing in Germany, it’s what AT&T have done in the United States because they are sensible, rational people using the latest technology and the latest technology is to use this hybrid approach because you can save most of the time and most of the money and therefore people can get broadband for a much lower cost.

ALAN JONES:

But if this mob keep going with what they’re talking about, we’ve got thousands of kilometres of ducts, perhaps more than one and half a million pits, many thousands of which might have to be replaced, could contain asbestos. Where does this end up under their proposal?

MALCOLM TURNBULL:

Well Alan, it would take in my judgment, several decades to complete it. We’ve assumed, because we’ve been generous to Labor for reasons of conservatism, we’ve assumed they can complete the project in four years longer than they’ve said so by 2025 rather than 2021. I think that’s very generous, but it will take a hell of a long time.  And remember, in 2007 when Kevin Rudd came into office there were 2 million households that could not access broadband in the sense they couldn’t download Youtube video. There still are.

So in six years of all of this money, all of this rhetoric, all of these promises for the vast majority of Australians nothing has changed. Right at the moment, they said at the end of 2010 that by June 30 this year they would have passed 950,000 premises in brownfields areas – you know, built up areas – with fibre, they claim to have passed 162,000.  That’s a bit of a shortfall, and of them, only 107,000 can actually connect. So they’ve achieved only slightly more than 10% of their targets. I mean, that is a massive failure.

ALAN JONES:

It’s frightening. Massive failure. I mean the Telstra boss, I understand, David Thodey told Bill Shorten way back in 2009 it would be better if NBN dug their own pits rather than use Telstra’s and here we are still in this complete mess.

MALCOLM TURNBULL:

Let me give you an example Alan. The contractors are telling us -- and by the way all their cost estimates are rubbish, and we’ve said this. The contractors are saying they will need between 30-40 per cent more to be able to break even. I mean, the subbies are losing money, the prime contractors are losing money. What they’re telling us is that only 30 per cent of the Telstra conduits, the ducts, which are just pipes in the ground, are actually useable --

ALAN JONES:

That’s right!

MALCOLM TURNBULL:

And you know, they’ve been in there a long time, they’ve got silt in them. It is a hugely expensive exercise and if I could just say this, that eleven billion dollar figure you’ve mentioned for Telstra. That is a very slippery number and it’s slippery in this sense. Telstra will be paid by NBN Co well over $60bn over some years.

The $11 billion is the after tax net present value and that’s calculated at 10% discount rates so all of that going into the mass of it, all of that is calculated to make it look smaller than it is. So $11 billion sounds big but that is not the size of the cheque NBN Co will be writing, it is just a fraction of it.

ALAN JONES:

But you talked about the cost estimates being rubbish, I mean this is pink batts, building the education revolution all over again. This is back of the envelope Rudd stuff isn’t it?

MALCOLM TURNBULL:

Absolutely, when Rudd got into government in 2007 he had one very sensible policy which was that the Commonwealth should not invest in any major infrastructure project without a rigorous cost-benefit analysis and everyone said ‘amen to that’. With the NBN the biggest infrastructure project in our history, they have refused to do that. They have never actually said, asked this question: ‘What is the fastest, and cheapest, and most affordable way to ensure that everyone gets very fast broadband?’ And then look at all the alternatives.

They refused to do that, they simply decreed that they would take fibre optic cables to 93% of houses and businesses in Australia without any real understanding of what it was going to cost or how long it was going to take. And so what they have done is write the biggest blank cheque in our country’s history. This is like saying to a builder, just build me a big house I don’t need a quote, I don’t need a contract, just let me know every 6 months or so what your estimate is. That is how reckless --

ALAN JONES:

Frightening. Frightening. Just to end on a bit of humour if we can. It is Monday. I noted a piece on QandA by you about the debate, and you did argue that Kevin Rudd could have debated himself. Could you just briefly take my listeners through that point.

MALCOLM TURNBULL:

Well I was just making the point that there was no need for anyone else to turn up because Kevin has had so many different personas so many different positions he could debate himself on the economy.

Kevin 07 which as you remember was, ‘I am a fiscal conservative I’m just John Howard-lite’. Kevin 07 could have debated Kevin 09, which was a government should be at the centre of the economy. The western capitalist system has failed and it is only government that could rescue you. And then you could have Kevin spend, spend, spend which was basically Kevin 2008 and of course now we’ve got Kevin 13 which is I want to have a closer working relationship with business, I want business to understand what the direction of the Government is going to be.

And he’s had asylum seekers and people smuggling – he’s had every possible position on that. He honestly does not need anybody else, he could cover the entire field with his own positions.

ALAN JONES:

I think you said he could be a panel on his own.

MALCOLM TURNBULL:

That’s right. He could be a panel on his own. Not just a schoolboy debate he could be a whole panel. He could play Tony Jones and all of the guests.

ALAN JONES:

Then you could have church-going Kevin debating swearing Kevin couldn’t you?

MALCOLM TURNBULL:

That’s right. That’s right. Bill Leake had that wonderful cartoon of Kevin in church called ‘Kevin’ and then the next one was him swearing called ‘Kevin and hell’.

ALAN JONES:

Good to talk to you. Thanks for your time.

MALCOLM TURNBULL:

Thanks very much.

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