Coalition Senators' Additional Comments
Coalition Senators support universal access to fast and
affordable broadband. However, we are concerned about the impact of the
Telecommunications Legislation Amendment (Fibre Deployment) Bill 2010 on the
cost of greenfield housing development and the associated flow on effect for
home buyers, particularly first home buyers.
Coalition Senators are also concerned at the wide ranging
powers delegated to the Minister under the Bill and the potential for further
regulatory imposts on the property development industry.
Cost impact
Coalition Senators note the concerns of the property
industry which has cautioned the legislation could add $500 million annually to
the cost of new housing.[1]
For instance, the Housing Industry Association noted that:
costs will inevitably be passed on to new homebuyers together
with a number of multiplier costs, for example, stamp duty charges on the final
cost of the residence.[2]
Submitters to the inquiry also noted the Bill discriminated
in its treatment of greenfield home buyers as opposed to purchasers of
established dwellings.
Communications analyst Mr Paul Budde, cautioned:
the cost of FttP solutions in greenfield estates will be
funded by the end-users, while their brownfield neighbours will get it all for
nothing! Having paid for their own infrastructure, residents are expected to
pay the same, nationally homogenised service prices that are offered by
NBN-based providers.
In response to a question on notice, Master Builders
Australia suggested;
There should be equitable treatment of both greenfield and
brownfield homeowners in relation to the funding of the national fibre
deployment and the NBN project should align with and include the greenfields
fibre deployment requirements.[3]
This sentiment was echoed by the Housing Industry
Association (HIA) who stated:
HIA believes the Bill will create an inequitable system and
place an additional burden on (new) home buyers. [4]
Coalition Senators are concerned that the cost impact of the
Bill will be borne by purchasers of housing in greenfields estates.
Minister Conroy released the long awaited National Broadband
Network Implementation Study six days ago and well after the conduct of
hearings for this inquiry.
We note the study recommends that NBN Co take responsibility
for the rollout of fibre to greenfields estates. The Government has not
publicly responded to the study. It is unclear whether the Government intends
to adopt this particular recommendation, and if so, how it will impact the
Bill, and its cost implications.[5]
To that end, Coalition Senators note a further
recommendation by Master Builders Australia that:
the developer should only be responsible for the provision of
pit and pipe reticulation for fibre... that would allow future fibre installation
when the super-fast broadband service is available. All other costs should
become the responsibility of the Service Provider and/or Government.[6]
In his submission to the Committee, Mr Paul Budde similarly
noted:
it would be in the interest of all parties for efforts to be
made to align the NBN rollout for brownfield sites with that of the greenfield
rollouts.[7]
Impact on housing affordability and
first home buyers
Coalition Senators are particularly concerned at the Housing
Industry Association's assertion that the cost impact of the Bill would be
disproportionately borne by,
...first home buyers who can least afford those additional
imposts at the time of the purchase, placing further negative pressures on
housing affordability.[8]
Coalition Senators note the Government's intent that
subordinate legislation provide for the installation of fibre to be required
where it could be installed at a price of $3000 or less.[9]
Urban Development Institute of Australia Chief Executive, Mr
Richard Lindsay, cautioned that buyers may be unable to bear such an increase
to housing costs saying:
You will find that $3000... will have a significant impact in
the lower income areas. [10]
And,
The market is extremely sensitive in terms of affordability. [11]
Coalition Senators consider that the imposition of this cost
on first home buyers is unreasonable.
Master Builders Australia criticised the assertion that the
Bill could be justified by aligning broadband as an essential service alongside
water, power and sewerage:
...critical services are essential for health and amenity;
high-speed broadband is not.[12]
Coalition Senators note these criticisms highlight a direct
contradiction between the Bill and Prime Minister's promise prior to the 2007
election about housing affordability. Since then the Prime Minister has commented
on housing affordability:
It's a problem growing over time", and that "the
case for action could not be stronger.[13]
Well, working families are under financial pressure, and it’s
very important therefore that Government is involved in the business of helping
them with housing affordability.[14]
Obviously however, there are real problems in terms of
housing affordability. They continue, and we’re going to have to continue to
work on this in the future.[15]
Uncertainty – too much left undone;
too little time to do it.
Telstra cautioned that the broad scope of Ministerial
discretion provided by the Bill could fuel greater uncertainty and impose
further constraints in the housing sector.
In particular, Coalition Senators note comments by Telstra
that the Bill:
only provides a framework for the exercise of a series of
broad Ministerial discretions which will determine how the policy applies in practice.
The Urban Development Institute of Australia also noted the
lack of certainty:
there is still a significant lack of knowledge in relation to
NBN Co‘s Network deployment plans and technical specifications, as well as the
ownership and cost implications of the FTTP provision in Greenfield
developments.[16]
In response to a Question on Notice, Master Builders
Australia noted:
we were cautious in our submission about the Bill; because
the implementation detail is not yet settled and this detail is all-important.[17]
Master Builders Australia told the Committee that the Bill
afforded little time to educate developers on requirements that would be in
place on 1 July 2010.
National Director of Technical and Regulatory Policy at
Master Builders Australia, Mr Robert Appleton warned:
July 1 is not far away, and to effectively educate our
members as to what their new responsibilities will be in that period of time
without knowing what they are going to be, would appear to be pretty difficult.
Coalition Senators are concerned that the Bill will impose a
raft of legislative requirements on developers and builders by 1 July 2010, the
communication of which is difficult given they are still being developed, and
once developed, will leave little‑to-no 'lead' time.
In these circumstances, it is unreasonable to expect
industry to be ready for a 1 July 2010 start date.
Coalition Senators believe the Government cannot remain
intent on 1 July 2010 commencement, without first having addressed the issues
outlined by submitters to the inquiry.
Additional regulation
Coalition Senators note several warnings that the Bill will
add an additional layer of regulation to an already heavily regulated sector.
Telstra made clear the ramifications of over-regulation,
saying:
The proposed requirements need careful consideration as
unworkable requirements may cause the installation of fibre in new developments
to cease altogether.[18]
Likewise, Master Builders Australia noted they would be
concerned if;
local government were to introduce further increased
stringency on greenfield and building requirements without adequate
justification or proving a cost-benefit to the community.[19]
Concluding Remarks
Coalition Senators support universal access to fast and
affordable broadband, and reiterate comments by Master Builders Australia that
developers should provide 'pit and pipe' infrastructure in greenfields estates
to facilitate future installation of fibre.
We note evidence by LandCorp that it and other developers
are already installing such infrastructure as a matter of course.
Regardless, Coalition Senators remain concerned that the
Government has failed to adequately develop the Bill's operational details with
industry, or to consult with key stakeholders to ensure awareness of, and
preparedness for, a 1 July 2010 start-date.
Coalition Senators do not support Government moves to force
developers to pay for the installation of fibre in greenfields estates.
Evidence to the Committee suggests such a move would inflate housing prices and
be particularly damaging for first-home buyers and those least able to bear any
increase in costs.
Recommendation 1
At this stage, for the reasons outlined above, Coalition
Senators recommend that debate on the Bill be postponed until the Government:
(1) Publicly issues its response
to the Implementation Study for the National Broadband Network;
(2) Adequately consults with
industry on the practical and operational issues related to the Bill and any
subordinate instruments;
(3) Reduces the scope of the
Bill and any subordinate instruments to the provision of 'pit and pipe'
infrastructure in greenfields estates (which will facilitate future
installation of fibre);
(4) Ensures that neither the
Bill nor any subordinate instruments require or effectively force developers to
pay for the installation of fibre in greenfields estates (which costs developers
would pass onto homebuyers); and,
(5) Undertakes that neither the
Bill nor any subordinate instruments will unduly impact first home buyers,
young families and housing affordability generally.
Senator Mary Jo Fisher Senator
the Hon. Judith Troeth
Deputy Chair
Senator the Hon. Ian Macdonald
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