Announcement of New NBN Board and Launch of NBN Strategic Review

October 3, 2013
Transcripts

3 October 2013

TRANSCRIPT OF THE HON MALCOLM TURNBULL
DOORSTOP INTERVIEW
CANBERRA

Topics: NBN Board Changes, commencement of strategic review
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MALCOLM TURNBULL:

I’m announcing that the Finance Minister and I have, with the approval of cabinet, appointed Dr Ziggy Switkowski to the board of the NBN Co as Chariman and I can also announce he has been appointed Executive Chairman of the NBN Co pending the appointment of a Chief Executive Officer to replace Mr Michael Quigley. As you may know already, we've received offers of resignation from five of the seven NBN Co. directors, I think I announced that a little while ago, and we've received one resignation. We have accepted four of those offered resignations, but have asked Dr Kerry Schott and Miss Alison Lansley to continue serving on the board.

So the board at present is a board of three. Dr Switkowski, Dr Schott and Miss Lansley. The Government intends to nominate additional non-executive directors to the board shortly.

I want to thank, on behalf of the Government, all of the outgoing directors. And in particular Mr Quigley, the retiring chief executive, and Miss Siobhan McKenna, the retiring chairman, for their leadership and service to the company, often in very difficult circumstances. And for the professionalism and courtesy with which they have helped manage this transition.

Now, in addition to this, we have announced today the commencement of the strategic review of the company. This, as you know, is part of our policy. This - the terms of reference are set out here. In a nutshell, however, the terms of reference will tell all of the Australian people and the Government - the shareholder of the company - what the status of the project is at the moment - how much it is going to cost, and how long it will take to complete it on the current plan, or the Labor Government's plan at the 93 per cent fibre to the premises model.

What savings, both in cost and time, can be made to the project if variations are made to the current plan, such as an increased use of fibre to the node, as we'd set out in our policy. And this will then give us the information, the context in which to make decisions about this project. The Government is very committed to the National Broadband Network. We are determined to see a National Broadband Network completed sooner, cheaper and more affordably for consumers.

In appointing Dr Switkowski to the board as chairman, we have appointed one of the most experienced telecom executives in Australia. Someone who has been the chief executive, not just of Telstra, but of Optus as well. A very distinguished company director and chairman since he left Telstra.

So Dr Switkowski is an outstanding Australian business leader, and we have every confidence that as chair - initially as executive chair, and then, after the appointment of a fulltime CEO as non-executive chair, he will be part of the new leadership team - the chair of the new leadership team, that will ensure the NBN Co. project is restored to health, and progresses in a cost-effective manner that, as I've said before, will ensure the National Broadband Network completed sooner, cheaper - in terms of cost to the Government - and more affordably for consumers.

REPORTER:

So how - tell me Mr Turnbull, how are you going to - can you just outline the process for finding the replacement to Mr Quigley? Is that a matter for the NBN, or will the Government be involved in - you know, is it an international head-hunting firm, you know, how does that work?

MALCOLM TURNBULL:

There has been a head-hunting firm engaged already by the company. And the appointment of the chief executive is one made by the company in consultation with the Government.

REPORTER:

Minister, today's revelations about Leighton Holdings. They have about $1.5b of contracts relating to the NBN. What impact will they have on Leighton's involvement in the project?

And secondly, did today's revelations have any impact on Wal King's involvement, or non-involvement, or future involvement, on the board?

MALCOLM TURNBULL:

Well look, I don't want to - the allegations that have been published today are going to be the subject of police attention. I don't want to comment on them, they don't have any connection with the NBN project.

As far as Mr King is concerned, I've been very rigorous in not making any comments or responses to the orgy of speculation about who may or may not be appointed to the board of NBN Co. Most of which, I have to say, has been wrong.

But the problem is that if I make a comment on one individual, then I'll have to make a comment on others. So the - I've got nothing to say about potential new directors, additional directors of NBN Co. other than that it is the Government's intention to appoint them shortly - additional directors shortly. And, as you can imagine, we're going through a very careful and methodical process of looking at various candidates for these important roles.

REPORTER:

Minister, his name, Mr King's name is out in the public domain, can you –

MALCOLM TURNBULL:

So are many other people's names. [laughs]

REPORTER:

Can you say that he's categorically not going to be appointed?

MALCOLM TURNBULL:

I'm not going to make any comment on any individual. There are so many - because if I comment on Mr King, then you'll ask me to comment on any of the other half a dozen or more people that have been filling up the Financial Review most days.

REPORTER:

Minister, you praised the professionalism of the outgoing board members, what was it that saw them have their offer of resignation accepted, when you didn't accept it from Schott and Lansley?

MALCOLM TURNBULL:

Well, you've got to - in any process of corporate renewal, you've got to have an element of continuity. And so a judgement had to be made. I don't want to reflect, and we don't reflect, adversely on any of the directors, continuing or departing.

But the project clearly does need new leadership. Both Miss Lansley and Dr Schott have relevant skills - Dr Schott of course a very distinguished economist, public sector economist, former chief executive of Sydney Water, familiar with linear infrastructure projects, familiar with government/business enterprises. Miss Lansley, of course, is a experienced corporate lawyer, and with a lot of experience in the telecom sector.

Now, this is not to say the other directors were not well qualified people as well, but we have to make a judgement. The two that are continuing provide that element of continuity, and they also have very specific skills and experience.

REPORTER:

Dr Switkowski left Telstra, personally, a much wealthier man, Telstra shareholders were much poorer for his reign. He made a disastrous investment in Asia, one of his things that he was criticised in the press was…

MALCOLM TURNBULL:

What was the share price of Telstra when Switkowski left, compared to when Trujillo left?

REPORTER:

Well, why are we comparing him to Trujillo?

MALCOLM TURNBULL:

Well I don't know. You're drawing judgement about Ziggy's reign, you might think about that.

REPORTER:

The company itself was on a decline, and it didn't have anything to do with…

MALCOLM TURNBULL:

Well look, I really don't want to get into a debate about the share price of Telstra.

REPORTER:

Why the confidence in Dr Switkowski? There was a lot of controversy about the way he ran Telstra.

MALCOLM TURNBULL:

Dr Switkowski has had a lot of experience in the telecom sector, and elsewhere in the business world, and we have every confidence in him. And I might say the reception to his mooted appointment, and has been - that's one of the few areas of speculation about this company's board that has been accurate, and has been out there for a long time. The reception has been very positive.

REPORTER:

Mr Turnbull, could I just clarify, when do you expect Mr Quigley to finish up at NBN Co.? And what input would you have, seeing you've engaged an [indistinct] firm, into a long-term replacement, or a permanent replacement for him?

MALCOLM TURNBULL:

Well, as I understand it - Mr Quigley resigned some time ago, as you know, back in July. And he, by arrangement with the company, with the then board, his tenure as chief executive would come to an end when a replacement was found. So, Dr Switkowski is a replacement, or be it a temporary one. So there is a new chief executive of NBN Co. That's Ziggy Switkowski, pending the appointment of a permanent CEO.

So - but Mr Quigley has, I know, been meeting with Switkowski today and effecting a good handover and so forth. As far as the appointment of a new CEO is concerned, as I've said, that will be made… that decision is made by the Government and the company. The company - the board of the company formally makes the appointment in consultation with the Government. So it's a… you know, it is a collaborative decision.

REPORTER:

Have you still got a timeframe for that appointment?

MALCOLM TURNBULL:

As soon as possible is the answer, but obviously the - there is a search - a search is been underway, but once you identify somebody then it may take them some time to extract themselves from whatever position they have. So it's - as soon as possible is the best answer I can give you.

REPORTER:

Dr Switkowski, has he ever rolled out a telecoms network?

MALCOLM TURNBULL:

Dr Switkowski ran a very large telecom company called Telstra, as you know, which throughout its whole life has been constantly rolling out networks. He also was involved in Optus at the time of the HFC rollout. But Dr Switkowski has not been hired or been appointed here as somebody to be the head of construction, right? He is the chairman of the company. He is the executive chairman, acting CEO, if you like, pending the appointment of a fulltime CEO.

REPORTER:

Will you be looking for someone with construction experience for that CEO role?

MALCOLM TURNBULL:

Jonathan, that is a very relevant criterion. Linear infrastructure is what this is all about and that is a specialised area. And while all infrastructure experience is valuable, linear infrastructure of this type is different to say building a dam or an office building.

Just have one more, if that's okay.

REPORTER:

In terms of the strategic review, why have the NBN Co priced the cost of Labor's former plan, which you put it to around $94 billion, Labor, I think, estimated it as low as $37 billion. Why have the company look at that plan given that your policy's very clear about fibre to the node. Is there some chance that you could review some elements…

MALCOLM TURNBULL:

No. Well, it's very important to know… to have a very clear-eyed accurate, objective assessment of where the company is at the moment and where it would go on the previous plan to actually - because that is effectively your benchmark. Where are we today? I mean, we don't have blank sheet of paper. You know, we'd love to. We'd all love to have a blank sheet of paper on this.

Labor's made shocking mistakes. There are billions of dollars that Labor has wasted that we will never be able to recover. This has been a shockingly miss-conceived exercise… wasteful exercise in public policy. We are endeavouring to recover value for it and get the job completed as quickly and cost-effectively as we can. So we need to know, what is the state of the project right now, accurately.

We then need to know what the real trajectory of it would be, were the previous policy settings to be kept in place. And then, we need to know what are our options for making it more cost-effective, finishing it sooner, making it more affordable for consumers, making it less expensive for taxpayers.

So that is the first thing that we've got to do. That is the most urgent priority, and the reason that we've asked the board to do it, or the company to do it, and of course it will be substantially a new board, and there will be a lot of new management there as well no doubt, is that we want the company to own it. You see, in the past, this project has been riddled with politics, and the company has been under pressure to deliver numbers and answers and documents that met the political priority of the previous government.

What I have said to the company is I just want the plain unvarnished facts. We do not want spin. We do not want the company to tell us what they think we might want to hear. We want to know what the real facts are. And then armed with those facts, then we can make decisions about the future of the project and Australians will see the actual factual context in which we're making them. That is terrifically important.

And the reason the company should undertake this is because we want them to own it. See, you can - there's any number of consulting firms you can hire, and the NBN Co's hired most of them over the last four years, but you can hire a consulting firm, they'll come in and write a report. But the directors, the executives may have no sense of ownership of it. They may - it's just something that descended from outside.

It's really important that the directors and the management own this. They should get advice from experts, you know, inside the company, outside the company - sure. But they have got to, at the end of the day, be able to say to the Government, as shareholder, this is where we honestly, genuinely, objectively, soberly believe this project is right now. This is where it was going to go, under the previous policy, and here are some options to have a more cost-effective outcome.

REPORTER:

I understand all that, Mr Turnbull, but what I'm trying to nail down is, you're saying - it sounds like your saying there's room for a change in the parameters of the fibre to the node network pending the review by the company of the current…

MALCOLM TURNBULL:

Sorry, you're saying that we're open-mined about - you're asking me whether I'm open-minded about technology. Look, I am not Stephen Conroy, okay? I view this technology issue objectively. The previous communications minister, but one Mr Stephen Conroy, regarded technology as an ideological political issue, and that's why billions of dollars have been wasted.

The bottom line is this; we want all Australians to have very fast broadband soon, cheaply, as cheaply as possible and as affordably as possible. So, the bottom line is, you use whatever technologies will deliver that outcome most effectively. And so we gave an example, a very thoroughly worked-out example in our policy based on international experience and so forth, but if there are other variants of that that will get the job done even better, then we are very open to it.

I can not emphasis to you too much that we are absolutely committed to taking an open-minded rational and objective approach to this project. This should be a business issue, not an issue of ideology and politics as it was under the previous government. That's how they dug that big multi-billion dollar black hole.
REPORTER:
It sounds like if they come back and say there's $8 billion variance, Labor's $37 billion figure is accurate. There's an $8 billion variance in the two plans. It doesn't make sense to do fibre to the node in dense urban areas, for example, you should…

MALCOLM TURNBULL:

Well, look…

REPORTER:

Is that something that Government [indistinct] consider then?

MALCOLM TURNBULL:

We will consider, obviously very carefully, and pay attention to the strategic review, but don't - let's not get into a hypothetical about what it might find out. Let's wait until we get the facts. We won't have to wait too long, I trust. But the critical thing is there is a total change of management culture, both from a government point-of-view and from the company point-of-view. We have now - we have stepped out of the world of spin and politics and ideology, and into the world of business and objective facts and making decisions in a rational way.

So on that note, I will say farewell to you. Thanks a lot.

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