STEVE PRICE: Finance Minister Lindsay Tanner's on the line. Thanks for your time.
LINDSAY TANNER: Good morning Steve.
STEVE PRICE: $4.7 billion: you'll take that out of the Future Fund. Is that what, Minister, gives you your 49 per cent, or your 51 per cent, share in this new entity?
LINDSAY TANNER: It's the initial building stock, Steve. It's the first instalment of the Government's equity. You might recall that prior to the election our broadband commitment envisages that initial contribution of $4.7 billion, so we've essentially just moved that across to this much bigger, faster proposal. But it's not the end of the story. We would expect to contribute further government equity through raising money from Aussie infrastructure bonds from the general public, but it can't be determined precisely how big the Government investment will be yet because we expect private sector investment and also the ratio between debt and equity - how much shareholding versus how much this entity would borrow - is something that's going to be subject to an implementation study. Australia Post, for example, borrows money off its balance sheet. Of course, the Government owns it. Telstra, when it was part-government owned, it had debt on its own account, it borrowed money, so all of these are things that have to be worked out in detail.
STEVE PRICE: When did this become your preferred option, or would you have still preferred to have the private sector do this job?
LINDSAY TANNER: We've obviously been considering these issues for some time and, let's make it clear, we do intend for the private to ultimately own and operate this thing. The real thing that's changed, Steve, from the time when we first put out our initial policy two years ago, is that the global financial crisis has totally blown away much of the money that's available for private investment in these kinds of things. So…
STEVE PRICE: [Interrupts] So at the end of the day you didn't have a private company willing to stump up the money to do it; is that what you're saying?
LINDSAY TANNER: Oh look, a bit more complicated than that but the proposals that were put in the tender process were fewer in number than perhaps you would have expected and I think the lack of ready capital certainly constrained the options that those proponents could put forward. Now clearly, that's not going to be the case necessarily in a year's time or two years time, but we don't believe Australia can wait. The transforming impact of having global class, world class broadband available to everybody all businesses, people across the country - the impact that's going to have on productivity, on regional Australia, on small businesses and major businesses, on health services, will just be enormous. And we can't afford to wait because Australia's been lagging much of the world, and we're now lagging countries in our region as well.
STEVE PRICE: I'm already getting positive feedback on that. You just wonder why then we waited so long.
LINDSAY TANNER: Well Steve, I don't want to be too partisan here, but I think the Howard Government fiddled around with this for years. They never really bit the bullet. What we've learned as a result of this tender process…
STEVE PRICE: [Interrupts] Did they find it too hard, did they?
LINDSAY TANNER: Oh look, I don't want to belt them up too much because I think they handled this terribly. I was Communications Shadow Minister, as you know, for a while and I used to criticise them. But as it was becoming clear that broadband was the key to future economic growth and productivity they really just thrashed around and tried to look like they were doing something and didn't really do very much. The thing we've learned out of our tender process was that our proposal at the election was always seen as a stepping stone towards the big ultimate goal of fibre to everybody's home, to - or to the vast bulk of homes and businesses. And the tender process basically said to us, look, don't just go the stepping stone, go the whole way. Yes, it's big but the benefits are enormous and the rest of the world's starting to do it.
STEVE PRICE: Email question from one of our listeners, Richard, says: given that the US and the UK recently refused offers from China to build similar infrastructure projects, can you ask the minister whether this project will be built by an Australian company.
LINDSAY TANNER: Look, I can't give an answer as to how the process of actually building the network will unfold, Steve, but the identity of who builds it, it's ultimately going to be Australians doing the work and the kinds of people that currently do this work are sometimes foreign-owned companies but companies with very significant presences in Australia. You've got your Alcatels and Ericssons and people like that who do these kinds of major infrastructure work, which Telstra employs to do work for them, which other telecommunications companies do. So I - clearly, I can't…
STEVE PRICE: [Interrupts] So if there was Chinese ownership in a company it would just be treated as like any other company?
LINDSAY TANNER: Oh look, well that's what I would expect. I don't think we'd be putting any specific restrictions on…
STEVE PRICE: [Interrupts] Does it let Telstra back in?
LINDSAY TANNER: It does open up that opportunity, that's right. It's ultimately a matter for Telstra but they, of course, failed to comply with the requirements of the tender process of the previous process. Now that process is over and it didn't produce an outcome…
STEVE PRICE: Yep.
LINDSAY TANNER: …so in other words, it's back to the drawing board for everybody here. It's up to Telstra how they propose to handle this but we certainly encourage them and all other telecommunications companies to get on board, to contribute. It will be great for them because it means that whoever's selling telecommunications services is going to have a much greater opportunity to sell services. There'll be more people participating, more businesses, so it will be great for Telstra and other companies that want to sell services.
STEVE PRICE: You've got a good understanding of this because of your previous role so I can ask you these questions where I might not have been able to ask them of another finance minister: does that mean that that Telstra pit at the bottom of my driveway, which runs its cable into the house, that you'll have access to that, or you still have to have an agreement with Telstra to run your cable up that pit?
LINDSAY TANNER: This will vary from situation to situation. So we're expecting that in some cases the cabling would be hung from electricity poles, as is the case with some cabling in current arrangements. In some cases it would be underground. You would have existing pits used. All of these things are issues that have to be worked out in greater detail in the implementation study. We certainly think it's entirely feasible. We think the demand will be there and the opportunities will be there, but you'll get different outcomes in different parts of the country. There are some places, for example, where all this stuff is underground, and that's something that's got to be worked out in detail.
STEVE PRICE: You know here you're talking to a large rural audience. Are you confident you're going to get this coverage out to places in remote parts of New South Wales?
LINDSAY TANNER: Yes, we are. Broadly, we expect - our advice is - that we'll get 90 per cent of the, of Australia's population with 100 megabits per second, fibre to the home or to the premises, and what that 90 per cent covers is basically every town of 1000 or so people, everything above that. So everybody that's in a town of about 1000 people or more would be covered by that. The remaining 10 per cent would be covered by satellite and by wireless arrangement. We would expect that that will deliver speeds that will still be at least as good or better than what our election commitment was.
STEVE PRICE: And you're confident that the wireless technology's not going to overtake the fibre technology to any degree that what you're doing is not going to become passed by anyway?
LINDSAY TANNER: Steve, this is, it's one of the things that's been speculated on for some years. Nobody can be absolutely certain about what the world will look like on this or any other area in 20 or 30 years time, clearly. But essentially the rest of the world has made the judgement and continues to make the judgement and our advice underlines this, that although wireless is a really important part of delivering these high-speed broadband services, it has limitations, it has restrictions and that fibre is still the Rolls Royce technology, the most effective way to deliver super-fast broadband across the country. That's the base on which we've made the judgement but the thing with this is that it's very similar to rolling out electricity, to rolling out new road networks, to rolling out the telephone. You can't really just sit around and say, well look, let's not do anything with this new fangled thing called a telephone because who knows something different might turn up…
STEVE PRICE: You get a double bonus too, don't you Minister, because this is going to have to generate jobs. I heard the Prime Minister mention the number of 25,000. How many new jobs and over how long?
LINDSAY TANNER: Yes, we expect that over the period of the eight years build it would in a typical year be generating about 25,000 jobs, just in the process of establishing the network and it would peak, we think around 37,000 jobs. That's in the actual just process of creating the network. Of course that doesn't last forever but eight years is a pretty serious period of time. But more broadly, you'll see new jobs created in a whole lot of businesses and in a whole lot of parts of Australia because of the transformation that occurs here. It's a bit like…
STEVE PRICE: [Interrupts] I guess you're going to have to have hubs all around the country where you roll this stuff out from.
LINDSAY TANNER: That's right, and in fact we are spending a bit of money off the Budget in order to invest in improving what's called backhaul. It's like the wholesale - it's the freeways of the system, for major towns, major cities like Broken Hill in regional Australia that are deficient at the moment. But it's a bit like the transforming impact of having a rail line go through a town, Steve. That's the kind of - it's the twenty-first century version of having a fair dinkum transport network go through a remote town.
STEVE PRICE: Can you just explain to me the bond aspect of this, where you will raise cash through selling Aussie telco bonds, for want of a better name?
LINDSAY TANNER: Well, there's been talks for a number of years about making it easier for ordinary small investors, just for ordinary families and citizens, to invest in government bonds. You can do that at the moment but you have to do it through, you know, essentially a wholesale process. The intention is to assist in the process of establishing government equity in the company. We would issue through the same process as we do issue ordinary government bonds, we would issue Aussie infrastructure bonds that will be available effectively for ordinary small investors. And in the current circumstances where people are seeing the share market pretty fragile after having taken a big dive and very concerned about their saving, then this will provide a great opportunity for a very strong investment that we believe there'll be plenty of interest in - out there.
STEVE PRICE: Yeah, it's a fascinating top…any idea what you might call it yet?
LINDSAY TANNER: [Laughs] We - not yet. I think that's something that we'll have to give some consideration to. There's obviously a lot of detailed issues we've got to work through in this implementation process. That's one of them, but I think the actual substance of what it does and how it does it, is…
STEVE PRICE: [Interrupts] It's an important decision, though, isn't it? It's an iconic name…
LINDSAY TANNER: Oh, it is.
STEVE PRICE: …you're going to have to come up with.
LINDSAY TANNER: I think that's right and, yeah, I think it's probably good that we haven't, you know, leapt out of the blocks with a name yet. We'll do that in due course.
STEVE PRICE: Appreciate your time as usual, thanks.
LINDSAY TANNER: Good to speak to you.
-ends-
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