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Nick Minchin

Leader of the Opposition in the Senate
Shadow Minister for Broadband, Communications and the Digital Economy
Liberal Senator for South Australia
Nick Minchin


Senator the Hon Nick Minchin

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Telstra’s exclusion from National Broadband Network tender processEmail this pageBack

Monday, December 15, 2008 Printer Friendly Version


Senator Minchin:The exclusion today of Telstra from the Government’s $4.7 billion National Broadband Network tender process is just the latest instalment in a saga of incompetence, delay and confusion on the part of the Rudd Government in relation to this very important project and it is quite extraordinary on the day on which the Government is announcing the details of its Emissions Trading Scheme it would choose to make this announcement that it has excluded Australia’s largest telecommunications company, the company that actually operates the current fixed line broadband network, from this $4.7 billion tender. And I ask the Australian people how can the Government possibly have a legitimate, competitive tender process for this $4.7 billion infrastructure project without the largest telecommunications company involved in any way? And the grounds on which Telstra has been excluded are spurious in the extreme. Telstra has been told that it cannot be considered because it did not submit in time a plan for the involvement of small business in their tender. This seems utterly extraordinary and again raises real doubts about what is going on. Are Telstra being deliberately excluded and if so, why?

As I say, if they have been excluded, how can the Government possibly have a legitimate, competitive process in deciding who is going to win this $4.7 billion tender. The Government’s management of this whole process has been utterly incompetent. The Government has deceived the Australian people. Mr Rudd and Senator Conroy promised us that about now they would be actually announcing the beginning of construction of this network. Well the tenders have only just closed, they have just excluded Telstra, we won’t know who the successful tenderer is until next year. I doubt that we will see any construction for at least another 12 months. This is a saga of complete and utter incompetence on the part of the Rudd Government.

Question: But if Telstra have missed the initial deadline, surely the company only has itself to blame?

Senator Minchin: Well, Telstra after all, were in the situation where the Government provided no clarity whatsoever about the regulatory environment that would apply to the National Broadband Network.

Telstra were given no assurances whatsoever about whether they would be required to break the company in half if they won the tender process. So the Government is guilty on that part. And nevertheless Telstra did put in a proposal by the 26th November, and as I understand it, they actually did submit a small business participation plan some days later, and yet now we find in a letter sent to Telstra last night, on a Sunday night the day before the announcement of the Emissions Trading Scheme, that they are just to be excluded on these spurious grounds. So the fault lies with the Government in my view, not with Telstra.

Question: But Senator, Telstra did only put in some sort of half-hearted bid, the Minister really had no option.

Senator Minchin: The Minister assured me in the Senate when I asked him about this, that Telstra’s proposal would be considered in full along with the other proposals that the Government had received. And remember Telstra were reluctant because they had received no clarity about the regulatory arrangements or whether the company would be required to be broken up. Nevertheless Telstra did put in a proposal and Senator Conroy assured us it would be considered. Now we find a couple of weeks later they are to be excluded entirely from the process.

Question: Can you tell us anything about the other proposals that have been put forward from other carriers?

Senator Minchin: You will have to ask them. There are other proposals, I think two or three other national proposals and a couple of regional proposals.

Question: Any in particular that you are . . .

Senator Minchin: I don’t want to reflect or comment on other proposals. My concerns are with the process itself. I think this is a deeply flawed, fatally flawed process which has now got real question marks over it without the participation and proper consideration of Telstra’s qualifications for it, given they are our biggest telco and currently operate the existing fixed line broadband system.

Question: So in your view, can a national broadband network be built without Telstra?

Senator Minchin: Well Telstra must be involved because what the Government is really proposing is an upgrade of the existing Telstra network of changing it from copper to fibre, that’s what’s really being proposed. So you can’t really do this without involving Telstra. You could award the contract to somebody else, but Telstra would have to be involved because Telstra will still control the copper from the node to the home, but to have Telstra taken right out of the competition altogether so that the merits of Telstra’s capacity to build the network is not even going to be considered compared to the others. It strikes me as just a fatal flaw in the whole process.

Question: How do you propose re-start the process?

Senator Minchin: Well I think this is an extraordinarily fatally flawed process. We have been saying for some time that the Government should have continued with the Opel contract to provide telecommunications and broadband to rural and regional Australia and that would have been completed by July of next year if the Government had stuck to the contract we signed. They should, I think, abandon this process, sit down with the industry, clarify the regulatory and legal arrangements that will surround this process, make it clear to Telstra whether they are going to be broken up or not, and then work with the industry to work out how we can get fibre through metropolitan Australia while at the same time rolling out a high speed broadband to rural Australia under the Opel contract.

There are alternatives, but this Government in a flippant election policy, without giving it any real thought, made promises they knew they could not keep to the Australian people.

Question: But is Telstra equally at fault by just assuming that it would be a fait accompli they would be included?

Senator Minchin: Well I don’t think that’s fair on Telstra given that they made it clear they had great difficulty with this process given the Government would give them no clarity whatsoever on whether or not if they won the tender they would be required to break the company in half, which is what a lot of people have been suggesting. The Government refused to answer that question, wouldn’t tell Telstra whether or not that would be a requirement of them winning the tender, nevertheless, in good faith Telstra did put in a proposal outlining how it would build the network, and now they are being treated like this – just being excluded on the most spurious of grounds. It seems extraordinary.


Senator Minchin: Today’s exclusion of Telstra from the National Broadband Network tender process, a $4.7 billion tender, is just the latest instalment in a saga of competence on the part of the Rudd Labor Government in relation to what they describe as their biggest infrastructure project, and it is extraordinary that Telstra would be excluded by I gather a letter to Telstra on a Sunday night to be announced today, the day on which the Rudd Labor Government is announcing the details of its Emissions Trading Scheme. It looks like the Rudd Labor Government is deliberately trying to bury this quite extraordinary announcement of the exclusion of Australia’s largest telecommunications company and the operator of our current broadband network, our fixed line broadband network, from any consideration as part of the $4.7 billion tender. I think it brings into doubt the whole tender process. It damages I think fatally, the whole integrity of the process. There will be legal questions raised by this. I imagine Telstra are considering their legal options. So I think this is just an extraordinary turn of events and is really just an example of gross incompetence on the part of the Rudd Government.

Question: Do you think the grounds are something that should be questioned?

Senator Minchin: To exclude Telstra on the basis that it was late in submitting its small business participation plan for the building of a National Broadband Network seems utterly spurious in the extreme. It is as though the Government was trying to find an excuse to exclude Telstra from this tender process. Telstra did submit in early December a small business participation plan, but the Government has stuck to the sort of letter of the law to say, oh well you didn’t submit it by the 26th November so we are going to exclude you entirely from any consideration as to who’s going to build this what will be a $10 billion National Broadband Network, and yet Telstra has clearly got to be considered. How can you possibly have a fair, competitive, rigorous tender process without Telstra playing any part in it whatsoever. It seems extraordinary.

Question: Why is it so important that Telstra does play a part in this process?

Senator Minchin: Well I think all the other bids need to be compared against Telstra’s bid because obviously Telstra is the biggest company in Australia, an Australian company currently operating the current network and what’s proposed by the Government is essentially an upgrade of Telstra’s network. This is not a separate free-standing network. This is upgrading Telstra’s copper network to fibre and so Telstra have to be involved one way or other. They may not be involved as the builder, but surely to determine the merits of other tenderers you would need to compare their bids to Telstra’s and vice versa. I think the others would say well, you know, you should be considering ours against Telstra’s because now there are real doubts – is the Government going to get to the end of the tender process and then say, oh well maybe we’ll go back to Telstra because the others don’t match up. I mean it’s just an extraordinary turn of events.

Question: Who’s to blame for all of this?

Senator Minchin: Well the Government has been incompetent from the outset. The Government misled the Australian people at the time of the last election with a very flippant promise about delivering high speed broadband to 98% of Australians. They gave no detail of that whatsoever, or whether it really could be achieved. They promised that construction would begin by the end of this year – well that clearly won’t be the case and I’d say it’s at least 12 months away before any construction could commence. So the Government has misled the Australian people all along the way and conducted a flawed tender process that gave the tenderers no guidance about the legislative or regulatory environment, gave Telstra no guidance as to whether a requirement of them winning the bid would be that they would be broken up as a company into retail and wholesale entities, so Telstra understandably had great concerns about the process from the outset, so I think it’s just incompetence from the outset by the Government.

Question: Is Telstra partly to blame though as far as, you know, if they really wanted this, couldn’t they have got it right?

Senator Minchin: Well, I think Telstra had a right to be told whether or not them winning the bid would involve the company being broken up, which is what a lot of others were saying, and every time the Government was asked whether that would be ruled in or out, the Government refused to answer the question. So the Government left open the possibility that Telstra winning the bid would involve the company being broken in half and I’m not surprised that Telstra on behalf of its millions of shareholders said well, we are sorry we can’t be a full participant in that, but we will put in a proposal and we would like you to consider it. When I asked Senator Conroy in the Senate would Telstra’s proposal be considered along with the other bids, he said it would be. Now we find in the middle of December, on the day on which the Government wants a lot of coverage of its Emissions Trading Scheme, they quietly announce an extraordinary development and that is the total exclusion of Telstra from any consideration in this $4.7 billion worth of taxpayers’ money that’s involved in this scheme.

Question: With Telstra out of the picture, how would this be done, achieved?

Senator Minchin: Well we don’t know ultimately whether Telstra will be out. This is the thing.

The Government’s going to spend eight weeks considering all the other bids, without considering Telstra and its merits compared to the other bidders. The Government could decide that it doesn’t want any of the others and come back to Telstra, or it could decide that one of them is who it wants, but decides so on the basis of not having even considered Telstra’s merits, so who knows where this is going to end up. It could well end up in the courts the way the Government is handling it, because I imagine several companies now have real doubts about the legal ramifications of all of this.

Question: What would you like to see to be done at this point?

Senator Minchin: Well, I think the Government’s got itself in a hopeless mess. The Government should have persisted with the Opel project to provide broadband to rural and regional Australians via a wireless system that would have been rolled out by July of next year providing high-speed broadband to the really critical areas of Australian need, in rural Australia. I mean the Government last week abolished the Communications Fund which was set up to help rural people; they have abandoned the Opel contract which was designed to provide broadband to rural people, now they’ve got stuck in a hole on the National Broadband Network and we won’t see anything of that for at least five or six years, so I think this is a tragedy for rural people in particular who do need a much better broadband service.

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