Transcription of Finance News Network Interview with Shadow Minister for Communications and Broadband, Malcolm Turnbull.
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today is Malcolm Turnbull. Malcolm welcome to FNN.
Malcolm Turnbull: Good to be with you.
Lelde Smits: As Shadow Minister for Communications and Broadband, you haven’t held back from criticising the National Broadband Network (NBN). What are your main concerns?
Malcolm Turnbull: It’s far too expensive; the Government is spending tens of billions of dollars more than they need to in order to achieve the objective of ensuring that all Australians have access to very fast broadband.
Secondly and as a consequence of that, it’s going to be very expensive. It’s clear that broadband costs are likely to go up over time, whereas in fact, we’ve seen because of technology - better technology and more competition we’ve seen over the last decade, broadband costs declining. So this is a bad deal for taxpayers, they’re spending too much money on this. It’s a bad deal for consumers; it’s going to make for a more expensive broadband.
Lelde Smits: But irrespective of these points, the NBN (National Broadband Network) is well on its way to being rolled out. What can be done about it now?
Malcolm Turnbull: Well it’s not well on its way to being rolled out, it’s only got a couple of thousand people actually connected and using the fibre to the home (FTTH) service, and another couple of thousand using their wireless and satellite services. So they are in very, very early days. If you asked me what we would do? Well obviously that’ll be dictated by if and when there is a change of government.
If there was a change of government tomorrow, just for example, what we would do is immediately undertake a rigorous cost benefit analysis with the aim of ensuring that in each particular geography we use the mix of technologies that is most cost effective and quickest in terms of delivering people the broadband speeds they need.
Lelde Smits: Now while the roll-out program hasn’t been completed, it has started. How easy would it be to implement those changes?
Malcolm Turnbull: Well very easy, you see everywhere – well it’s not very easy, but it’s straight forward. Everywhere in the world telecommunications companies are upgrading broadband services, but are endeavouring to do so in the most cost effective way. So where they can upgrade Hybrid Fibre Coax networks, Pay TV cable networks to deliver very fast broadband, they’re doing that.
We’re not going to do that in Australia, the NBN in fact is paying Telstra Corporation Limited (ASX:TLS) billions of dollars and [Singapore Telecommunications Limited's (ASX:SGT) Australian arm] Optus, to decommission their Hybrid Fibre Coax networks – an extraordinary waste of investment and infrastructure.
Lelde Smits: NBN Co’s largest customer Telstra has just challenged the pricing structure of the NBN in a submission to the ACCC (Australian Competition and Consumer Commission). What response do you think is required from Australia’s competition regulator?
Malcolm Turnbull: Here is the NBN Co, a massive government financed, government owned statutory monopoly. It should be dealing with everybody on the same terms and conditions, completely level playing field. And you’ve got to ask yourself, why do you need to have separate wholesale broadband agreements? Why wouldn’t you simply have an access undertaking, a standard agreement that covers quality of service issues, pricing, everything that is approved by the ACCC, overseen by the ACCC and that everybody can sign up to.
Now that would be – if you’re going to have a big government monopoly and we don’t agree with that of course, but if you are it has to be very, very tightly regulated because otherwise it will inevitably abuse that monopoly power and charge higher prices.
Lelde Smits: So what’s holding NBN Co back from this sort of structure?
Malcolm Turnbull: Well – money, it’s just self-interest you know and the great race of life always backs self-interest because you know it’s trying. The NBN Co is a massively over-capitalised monopoly. What do monopolies do? They use their monopoly power to get the maximum income rent that they can and of course, if it’s over-capitalised they’ve got all the incentive. And because there’s no competition, because they’ve eliminated any competitors, there’s no restriction, no obstacle to them charging as much as they can.
You know they can make all the protest they like, I mean the reality is the NBN Co because of the way the Labour Government has set it up, is going to be a bad deal for taxpayers, they’re spending too much money. And it’s going to be a bad deal for consumers because they will ultimately pay too much for broadband access, because it’s an over-capitalised monopoly.
Lelde Smits: I certainly hear your point; let’s get to the shape of Australia’s broader economy then. In what shape do you think Australia is in to bear the economic pressures stemming from Europe?
Malcolm Turnbull: We are certainly much better off than most other developed countries and that’s a function of a couple of things. One is the fact that we have, notwithstanding Labour’s extravagance, still relatively low levels of government debt. But that’s a tribute to the prudence of the Howard/Costello years, when Labour debt was paid off and cash was left at the bank.
Secondly our banking system has been well regulated; we haven’t had a subprime crisis again. That regulation was put in place under the Coalition. And thirdly of course, we have the commodities boom and the benefits of the massive urbanisation in China in particular, which has driven demand for our natural resources.
Lelde Smits: Now many politicians are very good at assuring us of Australia’s strong fundamentals and insist they’ll cushion us from Europe’s contagion. But do you believe we’re doing enough with what we have?
Malcolm Turnbull: No I don’t thing we are. As I said earlier, the Labour Government has spent too much and you know that is a big problem - we should not be running deficits at this time. With this mining boom going on, we should be running surpluses and we should be saving money out of this boom.
John Howard was able to save money when he was in government. We’ve got the biggest commodities boom we’ve ever had in our history and this government’s still running deficits. So they’ve been spending too much. We should be saving more and I think we should be building up a second sovereign wealth fund – a new sovereign wealth fund.
Lelde Smits: Turning to domestic fiscal consolidation: The Federal Government is targeting a budget surplus of $1.5 billion in 2012/13. Do you believe this is achievable and is it enough?
Malcolm Turnbull: Well my answer is firstly, it is achievable but is it going to be achieved by them? I think it’s unlikely that they will achieve it, it’s certainly achievable. We should be saving a lot more is the reality. But you know, this is a government that is addicted to spending. We’ve seen massive growth in spending under the Labour Government and they achieve so little with it.
Lelde Smits: So how do you expect the surplus will be generated and to what extent will it be bolstered by mining revenues?
Malcolm Turnbull: It’ll be very dependent on mining revenues plainly. I mean that’s the – the resources boom is generating a lot of revenue for government. You know, but whether it’s royalties at the State level or the Government’s mining tax (MRRT), although there’s a lot of controversy about how much revenue that will actually raise.
Lelde Smits: Do you believe it is an appropriate model?
Malcolm Turnbull: No. We’ve always opposed the Minerals Resource Rent Tax (MRRT) and we don’t think it’s justified, and I don’t think it’s a good model. You know there are a lot of arguments for changing the basis on which royalties are assessed, but really this is something royalties are very much within the jurisdiction of the states. And the complete failure to come to some arrangement with the states will make this tax over time, I think, essentially unworkable.
Lelde Smits: Malcolm isn’t there a chance that these taxes are a move in the right direction and we are actually better off with them, than without them?
Malcolm Turnbull: Let’s just get this straight. I’m not suggesting that there shouldn’t be royalties on mining. There are royalties, they are levied by the states and they’re quite substantial. Now the real question is, should the Federal Government be levying additional royalties over and above what the states are doing? And our response to that is no, that is not justified. If the states want to increase their royalties and they have done so, that is a matter for them.
Lelde Smits: So you think it’s a state issue?
Malcolm Turnbull: Well it is a state issue, it’s not a question of what I think, it is clearly a state issue. And this is part of the whole problem that we’ve got in our Constitution or Federal arrangements in Australia.
Lelde Smits: So how would that situation be different under a Liberal Government?
Malcolm Turnbull: Well we wouldn’t - we’ll repeal the tax, we’ve committed to repealing the tax. So that mining, you know the MRRT (Minerals Resource Rent Tax) will be repealed.
Lelde Smits: So looking ahead now. What sorts of fiscal discipline do you believe needs to be employed by Australian policy makers in the longer term?
Malcolm Turnbull: See the big difference between Labour and the Liberal Party, you know each party’s got its strengths and weaknesses, none of us are perfect. But the big - the core difference is the Labour Party believes that tax revenues belong to the Government; they are the Government’s entitlement. Our attitude is that income belongs to the taxpayer and yes, we have to levy those taxes but that money still belongs to the people. So we always feel that we are dealing with other peoples’ money and therefore, should treat it as frugally and prudently as we would if it were our own.
Lelde Smits: And just finally Malcolm for all your fans out there, what are the chances of you leading the Liberal Party again?
Malcolm Turnbull: Sadly, if there are those fans and if there are, that would be a very select club I think, I don’t think there’s going to be any change in Liberal Party leadership at all. I’m sure Tony [Abbott] will lead the Liberal Party to the next election, I’m completely sure of that. I think we are, you know, probably more likely than not going to win that election, so he’ll become prime minister. But you know there could be 18 months to go before the next election.
Lelde Smits: Well I’m sure you’ll have many people watching with interest.
Malcolm Turnbull: Good, thanks a lot.
Lelde Smits: Thank you so much for your time and insights today.
Malcolm Turnbull: Thank you.
Ends
