Interview with Ray Hadley on the NBN Board and strategic review

September 25, 2013
Transcripts

25 September 2013

TRANSCRIPT OF THE HON MALCOLM TURNBULL MP
INTERVIEW WITH RAY HADLEY
2GB SYDNEY

Topics: National Broadband Network Board and strategic review.
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RAY HADLEY:

The Communications Minister Malcolm Turnbull.  Minister G’day.

MALCOLM TURNBULL:

G’day Ray.

RAY HADLEY:

Haven’t had a chance to talk since you’re elevation to the Ministry.  Congratulations.

MALCOLM TURNBULL:

Thank you very much.

RAY HADLEY:

Now that you’re just a week into the job, are things worse than you thought they would be?

MALCOLM TURNBULL:

Well I was never very optimistic about the real state of the NBN.  It is remarkable that we went into the election campaign with Anthony Albanese letting the people believe – letting the public believe – that the NBN was, as he said, on track and on budget.  And that by June next year it would have passed 1.3 million premises. 

And yet on his desk, in a document that he had from the NBN Co, that he refused to release, the company itself was saying it was actually going to reach 420,000 fewer houses by June next year.  So he knew that the project was not on track and not on budget.  And of course the latest figures produced by the NBN indicate that they will only make 729,000 by next June. 

But Ray, I am not warranting any of these figures.  I don’t know whether they’re right.   The whole purpose of making some board changes and some management changes and getting a strategic review done is so that we can get the plain, unvarnished facts.

I don’t want any spin.  I have said to the NBN Co leadership and staff, I’m not interested in people telling me what they think I want to hear or what they think confirms with my political agenda, or the Government’s political agenda.  We just want to get to the facts so that we know how much this project, on Labor’s specifications, is going to cost and how long it will take.  And then having established that, we look at that, we look at what are our options for finishing it sooner, cheaper and more affordably for consumers.

RAY HADLEY:

I know you’re not going to guess.  But you’d obviously be thinking it will cost a lot more than Labor said it would cost – about $40 billion or thereabouts. 

MALCOLM TURNBULL:

Look I don’t have any doubt about that.  We gave it a very – I think as good an analysis as we could from the outside in our policy.  And we estimated that the total funding requirement to finish the project on Labor’s specs would be $94 billion.  But we caveated that by saying we’re doing this with public information and obviously a lot of insight from people in the industry.  We will find out what the real figure is and that will obviously become the benchmark – so that’s where you start.  And you say, okay that’s where the aircraft carrier is heading at the moment, what changes of course can we make so that it’s more cost effective and affordable and so forth.

RAY HADLEY:

It’s right, it’s been confirmed in The Australian.  First of all it was reported the Board has offered their resignation.  You called for it, did you not?

MALCOLM TURNBULL:

I did.  Yes.  Well I asked them to offer their resignations to give the Cabinet the freedom to reconstitute the Board.  We’re not saying we’re going to accept every single one of them but we need to have that freedom. We obviously have the ability to terminate directorships as Government but I gave the board the opportunity to offer their resignations and they we’re very happy to do so.

RAY HADLEY:

What about Mr Orgill why didn’t he offer he resign?

MALCOLM TURNBULL:

Well that’s, he seems to think that – he doesn’t think that’s appropriate. You’d have to ask him why he chose not to offer his resignation.

RAY HADLEY:

So now you’ll have to sack him?

MALCOLM TURNBULL:

Well if it was the Cabinet’s decision that he should cease to be a director, then we have that power which he acknowledges.

RAY HADLEY:

Well it’s a funny set of circumstances, I’ve met Mr Orgill a couple of times. Mr Orgill was given the job of overseeing the rort that was the BER. And I met him out at a school in North Western Sydney. I think from memory at Cattie – Cattie Public School. Having spent about three hours with him I had absolutely no confidence in the report he delivered. And he didn’t disappoint me in relation to the BER, I can assure you about that. I strangely didn’t even know he’d been appointed to the NBN board.

MALCOLM TURNBULL:

Well there it is you see. Obviously these momentous events escape your attention.

RAY HADLEY:

They do. Momentous for everyone. I’ll be more excited when he goes as opposed to being kept there. So it’s difficult because you’re waiting for this review, this 60 day review, but is there any – you’ve been all over this since day one – why the parlous financial state we can understand, but why the delivery times? Is it like the BER on steroids? That was $16.5 billion, this could be anywhere between $40 and $100 billion. Is that what it’s about, about giving people jobs they’re not capable of doing in terms of contractors and the like.

MALCOLM TURNBULL:

Look I think there’s some similarities. I think clearly Labor’s track record in managing projects is appalling. The fundamental problem with this project goes right back to the start where Labor never asked the right question which was: what do we want to achieve? OK, we want all Australians to have access to very fast broadband. Terrific.

That sounds good and it obviously should be affordable and it should be cost effective you would think. So, you would then say: well let’s look at the options at the alternative technologies what is it that we can do how can we best deliver this? They never went to that step. And they simply opted to build a fibre-to-the-premises network to 93 per cent of Australians never done anywhere in the world.

They had, in reality they had no idea what it was going to cost, they had no idea how long it was going to take. And with the best will in the world it would be very hard to estimate that from where they were. So they ended up writing this enormous blank cheque Ray. You see what other countries have done and this is the hubris of the Labor Party, they didn’t bother to see what had happened elsewhere, we’re not the only country upgrading our broadband – just about everyone is.

But what other countries have done is governments have said to the telcos: Look, you guys know what you’re doing you upgrade the broadband. The telco says well that’s all very good Mr Politician but a lot of these areas particularly in the bush and outer regions, outer suburbs of cities are not economic so the government says aright we’ll but you a subsidy of one kind or another.  That’s what they’ve done in New Zealand, for example, but then at least the Government knows what it’s up for.

They’ve written the cheque, that’s it and all the risk is on the commercial company. What these blokes did is they wrote a cheque to Telstra to pay Telstra for its network to shut it down and then took all of the risk, all of the execution risk on a start-up company managed by theoretically government appointees and governments of course are not good at running business by and large. So you could not have gone about it in a worse way.

Now having said that you know as I always say we are where we are, we are like the guy that gets lost touring in Ireland with his family and he pulls up into a little pub and he pulls up and asks the barman for directions to Dublin and the barman says if I were you sir I wouldn’t be starting from here. Well we wouldn’t be starting form here either but we are, but what we’re trying to do is to recover the most value and the most, both in financial terms and in national interest overall productivity terms from this project.

But I regret to say even if we achieve everything we seek to do in our policy and we execute it flawlessly there will still be a huge amount of money that has been wasted by Labor that can never be recovered.

RAY HADLEY:

The late Kerry Packer in referring to the purchase of his TV empire and radio empire by Aland Bond said you only get one of these in a lifetime when Mr Bond sold it back to him for a price that was far reduced from what he’d paid for it. Do you think David Thodey the boss of Telstra only gets one Labor government in a lifetime?

MALCOLM TURNBULL:

Well I hope so. I hope there isn’t another Labor government for a very long time. I don’t think we could afford it –

RAY HADLEY:

Well David Thodey would be doing handstands wouldn’t he?

MALCOLM TURNBULL:

Yeah well he absolutely did. He got a very good deal and I find the conduct – well look, let me compare this Ray, this is what they did in New Zealand. In New Zealand the government said to the Telstra equivalent Telecom New Zealand, they said OK we want you to separate your customer access network business, you know your network, from your retail business.

And they persuaded them to do that and they said alright so that’s now separated so all of the other carriers you know the competitors with Telecom New Zealand didn’t have to complain, they’ve now got a totally independent company called Chorus which owns the telephone and telecoms network. And so the government then said to Chorus alright now that you’re completely separated and you’re just a wholesale business here are some subsidies to enable you to get the broadband upgrade done.

Now the good thing in New Zealand is that the people who are doing that are a business that’s been going for 100 years, they know what they’re doing, it’s not a start-up, you know sure they’ll have plenty of problems along the way no doubt but the great thing there is that the government knows what it’s up for. It’s basically made a commitment, the tax payer’s written a cheque and that’s it whereas here we have no, we will find out at the end of the strategic review, but right now we have no reliable view as to how much this project will cost.

RAY HADLEY:

OK. Thanks very much for your time as always.

MALCOLM TURNBULL:

Thanks a lot.

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