PM: OK, thanks very much. Now, I've come today with a mob, really, so I'll describe the nature of the mob. We have of course the Deputy Prime Minister and Treasurer, Wayne Swan, the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, the Minister for Finance, Senator Penny Wong, and Mike Quigley who is the CEO of NBN Co.
And what we're here to do today is to release the business case for the NBN. If I can just describe how I would like to do proceedings, I'll make some - [laughs] thank you for that supportive look there, Matthew - I'll make some statements about the NBN, as will Senator Conroy. If we could at that stage take any questions that people have relating to the NBN, then when we have finished that, obviously Mr Quigley will leave at that point, then I will make some statements about an update on Christmas Island and then be very happy to take any questions of the day on other matters. But if we could have the NBN questions first, that would be fantastic.
Today we are releasing the corporate plan, the business case for the National Broadband Network. Now, if we look at the history of telecommunications in this country, in each century we have seen major developments. In the nineteenth century we first saw the telegraph connect Darwin with South Australia, putting the nation in contact right across our vast nation.
In the twentieth century we saw the rollout of the copper telephone network, putting Australians in touch with each other. And that technology has stood the test of time.But now we need to move to the next technology, the technology of this century, fibre, and that technology will be rolled out to Australians through the National Broadband Network. This is the telecommunications development of our century.
And the business case that we are releasing today confirms that the National Broadband Network can be delivered for a lesser cost than originally forecast, the total capital investment necessary is less than originally forecast, that the NBN can be delivered with a rate of return, which means taxpayers will be repaid their investment in the NBN with interest, that the NBN can be delivered with uniform wholesale prices and that those prices will be affordable for consumers with a $24 wholesale price for the basic product.
And of course this case also confirms that there are major benefits for our economy from the rollout of the National Broadband Network. And as people would be aware, there have been a number of estimates of the benefit to our economy, but it is worth at least 1.3 per cent of GDP for our economy to have access to this new technology.
And the business case that is being released today also confirms that by June 2013 the National Broadband Network will be able to be accessed by 1.7 million premises - that's homes, businesses, schools and hospitals able to access the National Broadband Network.
So the business case today, I believe, is good news and is outlining for Australians that building the National Broadband Network is affordable, that taxpayers can be repaid their investment with interest, that consumers will be able to access the benefits of the NBN at affordable prices, and that through the NBN we will be able to get the productivity benefits for our economy and be able to roll out education and health services in new ways to Australians right around the nation.
Now, people would recall that when the Parliament last sat we released a summary of the business case for the NBN as the Parliament considered the Telstra structural separation legislation. Since that time, the Government has received the ACCC advice on the points of interconnect decision and so the business case that is being outlined today includes the impacts of policy decisions taken by the Government having received that ACCC advice.
And the Government did determine to accept the advice of the ACCC to have a semi-distributed model, to make sure that we are using existing infrastructure to have more points of interconnect around the country for businesses to plug into.
The ACCC has advised the Government that with this model the ACCC has the regulatory powers it needs to ensure a uniform wholesale price should the market not deliver that. The ACCC has also said to the Government that its expectation is that there would be uniform retail prices.
In addition, when looking at the business case that's released today, the impact of the points of interconnect decision and other policy decisions are shown in the new rate of return, that rate of return being 7.04 per cent.
The impact of the points of interconnect decision on the rate of return has been a relatively minor one and that is because with this semi-distributed model and the benefits of the ACCC advice we know that we will be in a position to have a uniform wholesale price with all of the uptake in regional Australia that flows from the benefit of uniform wholesale pricing.
With those words, I'll turn to Senator Conroy for some comments.
MINISTER CONROY: Thanks, Prime Minister.
The release of NBN Co's corporate plan today reinforces that the National Broadband Network is financially viable and will deliver affordable prices to all Australians. It reinforces the Government's belief that the NBN is not only something Australia can afford to do, it is something that we cannot afford not to do.
Today we are releasing NBN Co's corporate plan and we are also releasing a statement of expectations for the company in implementing the National Broadband Network.
It is not usual practice for governments to release corporate plans for government business enterprises. We have never done it before and it certainly did not occur under the Howard Government. But the NBN is the largest nation-building infrastructure project in our history, and the Gillard Government is committed to ensuring that Australians are provided with as much detail as possible without compromising commercial sensitivities.
The release of the corporate plan means that all Australians can take a look at NBN Co and its assumptions and costings. Importantly, the corporate plan confirms that taxpayers will get their investment back in NBN with interest and they will get a world class network they can use for decades.
The NBN Co corporate plan includes detailed financial and rollout information that includes that government expects to contribute $27.5 billion in equity for the rollout. NBN Co's expected rate of return is 7.04 per cent which compares favourably with the average 10-year bond rate to September 2010 of 5.41 per cent. That means the Government can expect to recover all of its NBN Co funding costs with interest.
As a wholly owned company, the Government, by its complete control of the project during rollout and the flexibility to ensure outcomes, are optimised for all Australians. The total capital expenditure for the project is estimated to be $35.9 billion. By June 2013, NBN Co is expected to pass 1.7 million premises. NBN Co will offer a range of wholesale pricing options providing retailers with maximum flexibility to tailor their services to customers.
NBN Co will offer uniform national wholesale prices with its access price for its basic service of 12 megabit download and one megabit upload across all technologies starting at $24 per month. This will strengthen competition between retail service providers.
With a level playing field we've now created, we expect competition between retail service providers to be strong and result in better services and better prices for Australians.
As I said today, the government is releasing a statement that sets out our expectations of NBN Co as it rolls out the NBN.
One of the most important decisions recently finalised, as the Prime Minister has said, was on the number and location of the points of interconnect to the NBN and on battery back-up arrangements.
The ACCC advised the government that a network design where the NBN will extend to meet, but not over-build competitive back-all routes, would be the best outcome for competition and the long-term interests of end users. This approach has been generally supported by industry, in consultation with the ACCC. The government has accepted the ACCC's advice and, as a result, NBN Co will establish approximately 120 points of interconnect, 80 in metropolitan Australia and 40 in regional Australia.
The ACCC will closely monitor the level of competition on back-all routes and use its new upfront pricing powers to address any failure in these markets to deliver competitive outcomes, particularly in regional areas.
The government expects this approach will deliver a uniform national wholesale pricing outcome and support the ability of retailers, in the ACCC's opinion, to offer uniform prices at the retail level.
The government expects NBN Co to provide battery back-up to all premises in the fibre footprint, to ensure a standard telephone will continue to provide voice services during black-outs, and we're in consultations with industry about how to do that ongoing and what the implications are.
Additional policy decisions, stressed in the statement, include the role NBN Co and the ACCC will have in delivering uniform national wholesale prices. The NBN Co will be the wholesale provider of last resort for fibre connections in new developments. And performance and monitoring arrangements, including the NBN Co, will develop a charter that outlines how it will conduct its affairs to best meet the needs of stakeholder groups.
The statement of expectations not only gives clear direction to NBN Co, but also represents the government's final response to the implementation study. In the period since the study was delivered, and following consultations with NBN Co, industry and other stakeholders, a number of events have occurred that have had a bearing on how the government has responded to the implementation study and its key recommendations.
These events - that's three events stand out.
The financial heads of agreement between NBN Co and Telstra. The commitments to regional Australia agreed with the independent members, Tony Windsor and Rob Oakeshott, following the election. And the joint ACCC-NBN Co consultation process on the number and location of the points of interconnect.
In July 2010, in line with the implementation study recommendation, the government set NBN Co an objective to reach 93 per cent of premises with fibre technology by the end of the rollout period.
The government also requested NBN Co to build the wireless network that will deliver fixed wireless services, delivering peak speeds of at least 12 mb to premises in the 93 to 97 percentile of premises. And the government expects the NBN Co to maximise the use for existing infrastructure where it is efficient and economic to do so in the delivery of the fixed wireless network.
So 2010 is the year the Gillard Government's NBN vision became a reality. 2010 has been an extraordinary year for the NBN and Australia's communications landscape more generally. In 2011 it is time to focus on the delivery of this important infrastructure and how it will change our way of life in Australia.
We know with the release of these documents today and from the many studies and inquiries that have been carried out here and around the world, that the NBN is financially viable and will deliver enormous benefits to all Australians.
It is now time to pursue those benefits with determination and innovation, to turn our attention and energy to using the NBN to fulfilling our vision and to change the lives of Australians, no matter where they live or work.
Thank you.
JOURNALIST: Prime Minister, in your opening remarks you talked about a $24 wholesale price being the basic service. And you also - I think you said also that uniform retail at one point...
PM: I said that's the ACCC expectation, that's what I said.
JOURNALIST: So based on a $24 wholesale price, what's a reasonable retail price for people to expect to pay?
And secondly, when Kevin Rudd first announced all of this, there was a big focus on mum and dad investors being able to buy Aussie bonds to invest in that. What's happened to that?
PM: Right. Well firstly, retail prices will obviously be set by the retail market, but it's just, you know, a golden rule the more competition you have the better pricing consumers have.
Golden rule in markets of all kinds. It's a golden rule in telecommunications and the way in which NBN is being rolled out, uniform wholesale price will obviously facilitate competition between retail providers who will be vying for business with competitive prices.
The business plan that you also have today shows that NBN has factored in wholesale prices coming down over time in real and in nominal terms. So that is part of the information set that you've got today.
So when you add it all up, what does it mean for consumers? Well it means better quality; the NBN is obviously better quality than people have had access to. Fibre is better quality than the technologies people have been using. More competition - more competition is good for retail prices and, of course, we've got the benefit of the uniform wholesale price and its expectation of decline over time.
On private equity investment raising, you will see in the material that you have before you today that there is obviously a government equity injection and that NBN Co, advised by Goldman Sachs, believes that we will be well and truly able - NBN Co will be well and truly able to raise the private equity that's necessary.
JOURNALIST: A little bit of a follow up from that question. You talk about - you both mentioned retail prices will be affordable, but you can't say yet, because you don't know, what those retail prices will be, that they will be affordable, particularly for low income earners do you?
And also your Minister mentioned a lot of things that he says will happen including the - the repayment of the government equity and the internal rate of return. But aren't those based on assumptions? You don't have - you can't say definitely whether those things will happen either can you?
PM: Well every business in this country engages in business planning and that's exactly what NBN Co is doing. Every business in this country does that. And we have brought to bear, through NBN Co, the best available commercial expertise to put the document before you and before the Australian people today. It's been worked on by experts over a considerable period of time, informed by important things like the policy decision the government took following the ACCC advice on points of interconnect.
And good news in this document being released today is that the rate of return is higher than was initially anticipated in the implementation study. We are talking about a rate of return at 7.04 per cent. What that means for taxpayers is this is a use of taxpayer's money that has a sufficient rate of return, that taxpayers can be paid back with interest. It is more than the long-term government bond rate.
There's been any amount of discussion in this building about a cost benefit analysis. Well what this document is telling you today is the NBN is viable, with a viable rate of return, as a proposition in its own right. That's before you go to all of the economic benefits for businesses. It's before you go to all of the service delivery benefits for health and education in our country. That's what it's telling you in the business case.On retail pricing; retail pricing is a function of cost and the wholesale cost is there before you for the most basic product and retail pricing is a function of competitive pressures and there will be more competition in this market than there has been in the past. I'll also get the minister to comment briefly, then we'll come across.
MINISTER CONROY: Well that's right. Obviously, as Mr Quigley said in the briefing earlier and is in the document there, you have to make some calculations. But there isn't a national uniform wholesale price to compare it against. There isn't the quality of the fibre versus the quality of the copper to make a direct apples from apples comparison. And one of the great tricks in this sector is the willingness of all of those - and the ACCC has repeatedly had to intervene on this issue - to try and muddy up how you actually do an apples with apples comparison. There are all sorts of mechanisms that are used, at the moment in the marketplace to try and not allow you to make very simple comparisons. And one of the key questions is, well, can you compare a 10 gigabit download limit with 100 gigabit download limit? And they've got nothing to do with the speeds - they're just a limit to the amount to actually make comparisons.
So there's a whole range of complex issues that are going to be able to be dealt with very simply, because the pricing model of NBN Co is that there is one basic national wholesale price which allows you then to have a level playing field - something you haven't had before. And that's the really key difference.
In the past Telstra have had an incentive, obviously, and this has been identified in a whole range of access disputes, over 150 of them, you've all heard me talk about this before, that are now going to be removed.
There's no longer any need for game playing by NBN Co because they are the provider, they are the wholesale provider. So we are levelling the playing field and creating a competitive environment that will see, as Mr Quigley has said, nominal and real prices falling over time for, well, for the wholesale price, falling over time.
JOURNALIST: Just on the cost-benefit analysis question, so we're spending $27 billion of government money over the next decade and a half, two decades...
MINISTER CONROY: Eight years.
JOURNALIST: Well, okay, but it's out there for a long time.
MINISTER CONROY: $3 billion a year.
JOURNALIST: Before it gets back.
MINISTER CONROY: $3.5 billion a year.
JOURNALIST: Now we've just gone through a briefing where the overwhelming number of people using the NBN will be residential customers. And they will be using the NBN to download IPTV or something similar. Now what do you say to people sitting in traffic in Sydney or waiting in a hospital queue or spending money to send their kid to a private school because they can't get a decent education at a public school - why is that $27 billion better spent on the NBN than spent on public transport, hospitals, or education?
MINISTER CONROY: Because spending on the NBN is about spending money on hospitals. It is about spending money on hospitals. It is about spending money on education. It is about spending money on environment improvement through people being able to work from home. So they're not sitting in those traffic jams, so they're not sitting in hospital waiting lists because they're able to do those things from home.
Because if you look at what, for instance, Hong Kong have just completed on their e-health, can I - if I can finish, thank you. The e-health benefits if you look at what Hong Kong have done, are already saving lives.
Now what they would like to do next is what we're doing - and that is start taking pressure off hospitals by having people in their homes earlier. That means less waiting lists - that's what it's about, it's about improving the costs for public health, it's about improving the cost for public education, giving a richer education experience to your kids, giving a better health experience, giving a better aged-care experience, because you're able to have people stay in their homes longer - rather than putting them into aged-care centres, into institutions.
This is the sort of technology if you look around the world is already starting to happen.
And we released, my department, perhaps you haven't seen it, Sid, a study just recently about the benefits of people being able to work from home.
And they're calculated, I think, between $1.5 billion and $2 billion I think. We're happy to give you that. We've released that sum many months ago - which demonstrates the benefits, which means that people aren't sitting in those traffic jams for longer.
Now is it going to solve all of those state-based problems on roads? No. But what we have been doing is putting more money into public education. Putting more money - this is directly into education - more money into public education, more money into public health, more money into infrastructure investment around this country so we can actually chew gum and walk at the same time, because we're not just investing in the NBN. We're investing in public education. We're investing in public schooling. We're investing and getting all those other range of services like aged-care facilities. We're doing all of that and the NBN and all at the same time as bringing the budget back into surplus by 2013.
So we're managing to walk and chew gum. We're not sitting here wasting our time navel gazing. For those who tried to argue that a cost benefit is absolutely essential, it works on the flawed assumption that this loses money and you need the national benefits to counteract the losing of money.
This shows you're not losing money. Taxpayers get the money back plus interest.
JOURNALIST: Just on your deal with the Independents, obviously there was a lot more focus about the NBN being outside in rather than in and then out. How was that - and the Minister might be able to answer this - how has that affected the cost of the NBN and in fact the rates of return that in this short-term in particular?
MINISTER CONROY: That's based on an assertion that we were starting in the metro. If you look at where the NBN is already being built - Tasmania, hardly what can be considered a metropolitan centre, is a regional - it's a region.
JOURNALIST: We were told that you were going to be more outside in and...
MINISTER CONROY: No no. I've just started with Tasmania. Okay, if you look at four of the five first release sites that the NBN is currently building in place, four of the five of those are in regional rural Australia. Townsville, Camperdowns, Armidale, Willunga.
The only one of those that's metropolitan is Brunswick in Melbourne.
And then if you look at the next 19 sites that have been identified by the NBN Co, I think 14 of them are actually regional.
So this was based on an assumption from people that we already weren't highly focused on regional Australia. And so you can see from that that the NBN Co, I think we've identified there'll be 31 build sites across Australia, at once at our peak build. But we've already identified in those 19 that were already prioritised around regional Australia.
That's not to say that we're not going to be doing metropolitan - we're going to do that. But if you actually look at the balance of what's there now - we've actually already started in regional Australia. And this perception that suddenly we'd change the whole build structure was just wrong.
PM: Can I just - we'll keep going. And can I just say, all of the undertakings we gave the Independents can be acquitted with the figures in front of you.
JOURNALIST: I just want to ask, back on the retail and we've been trying to ask what sort of costs we can look at for the consumer at home - because you now have a wholesale level playing field on the wholesale price, surely there's some modelling that's been done by government and NBN Co that says what ball park we're looking at consumers paying, maybe a percentage mark up on the wholesale price that they'll end up paying to get at that 12 megabits per second or 100 megabits per second - why can't we get that sort of ballpark figure today.
PM: Well if I can...
MINISTER CONROY: It's actually in the document. If you look on page 105.
PM: There is some material in the document, but can I just say this, when you want a competitive market to work, when you want the competitive market to work and to get all of the benefits that competition can provide, the last thing you would want is me standing here as Prime Minister saying my expectation about mark up is - because then you're obviously giving a signal to the market about what people should go out and charge, whereas we want them to use their best energies, their best endeavours, their best innovation, their best marketing, their best thinking to compete in a market - and to offer people low prices.
What drives people to offer the lowest prices is the force of competition.
MINISTER CONROY: And if I can just make one point - the Chief Executive of the largest, I think, telecommunications company in the world came to see me a couple of weeks ago when Parliament was sitting on the extra Monday. And what he said, he's... you know, he's the Vodafone Chief Executive, and he wanted to talk about what we were doing, and what he's indicated publicly is that if we actually deliver on what we've talked about delivering, they will enter the fixed market.Now Vodafone aren't in the fixed market today.
So there is a direct statement from a CEO - I know it didn't make the front page of some newspapers because he was just the largest telecommunications company executive in the world - but they made it clear they will enter the market.
If there isn't a bigger endorsement of why you should do the NBN, I don't know what it was, from that one chief executive of the world's largest company.
PM: Okay, if... yeah.
JOURNALIST: Prime Minister, we've heard today that the remaining seven per cent is a market which wouldn't be touched by the commercial sector with this level of investment. What assurances can the government make, that should the NBN face privatisation, that that commitment would remain to provide that service to these people?
PM: Well we'll obviously - you know, our commitments about the servicing of remote Australia is what you're referring to isn't it, with the seven per cent? Our commitments will obviously be honoured in any decisions that was taken about privatisation would be decisions taken meeting those service obligations.
JOURNALIST: Once it becomes a private company...
PM: Well you can...
MINISTER CONROY: We've got USOKO.
PM: You can impose service obligations on companies that are not government owned.
MINISTER CONROY: But we are transferring responsibility for a whole range of, like, emergency services, those basic services that somebody's got to provide. And Telstra are required to provide them at the moment.
We're creating - at the moment it's called USOKO. We will come up with something slightly sexier - a term like that, possibly, you know, NBN was such a sexy name that they kept it. But USOKO is looking at holding all of those universal service obligations within it now rather than being on an individual company.
JOURNALIST: Isn't the NBN Co business plan half as competitive in regional Australia as what the ACCC wanted? They wanted 81 points of interconnect, and I understand there are 40 points of interconnect specifically located in regional Australia.
MINISTER CONROY: I'm not sure quite what you mean by that, but me, let me be clear about this - the ACCC have indicated that they will declare - so this perception that you get cheaper prices by having more POIs is not actually right. You increase the amount of competition and therefore lower prices by having less number of POIs.
So there's this perception that more POIs, more competition, this is actually wrong.
PM: And we are accepting the ACCC advice
JOURNALIST: They wanted 81..
PM: No we haven't moved, the ACCC advice has been accepted
MINISTER CONROY: The key different is that they've indicated that they are prepared to declare pricing on regional back-all routes if they is a problem and that's why the NBN Co have been able to say that there will be less of an impact on their internal rate of return because they expect that the take-up in regional areas, because of that decision by the ACCC, not the number of POI's that they're prepared to step into the market because of the market failure on back-all competition.
So they're stepping in, that's the key difference, that, with a simple argument 14 versus 200, it's that commitment from the ACCC that makes the difference for regional Australia.
JOURNALIST: Minister, you mentioned take-up
PM: Oh we were going to go over here...oh alright Dennis.
JOURNALIST: You mentioned take-up and both you and the Prime Minister have mentioned passing 1.7 million premises, what are the take-up estimates?
MINISTER CONROY: The next page in the presentation was indicated it's nearly seven hundred thousand I think? Right nearly six hundred thousand.
QUIGLEY: Nearly six hundred thousand.
MINISTER CONROY: Sorry five hundred and seventy thousand.
PM: That's access 1.7 million, anticipated usage of that access six hundred thousand. Is that your question? Yes. Ok, Kathryn.
JOURNALIST: Prime Minister I was also going to ask the same question but I also need a supplementary if I can. Just in terms of the issue of cherry picking and the next sort of legislative phase of this picnic. How does the government propose a...
MINISTER CONROY: We've already tabled it inside the bill that exist, that we tabled on the last couple of days of Parliament sitting,
JOURNALIST: The legislation?
MINISTER CONROY: Yes the legislation. So some of the cherry picking aspects, some of those are contained in there, and we'll look at other provisions if necessary, but it's a piece of legislation before the Parliament.
JOURNALIST: And have you begun negotiations with cross benches?
MINISTER CONROY: No, we only tabled it in the last few days of the Parliament, I think Senator Xenophon has already indicated that he's got some issues he wants to raise with us about it and we will go through all of that usual process that we go through to pass legislation.
PM: Yes, we will have plenty of time to work that through.
MINISTER CONROY: But the fundamental principle is a cross-subsidy works if the richer areas cross-subsidise the poor areas. If you can't guarantee the NBN Co can access those areas you can't ultimately protect with the cross-subsidised national wholesale price, so you've got to have the balance, you've got to be able to access those areas, as opposed to just those areas.
JOURNALIST: I understand that there will be considerable political sensitivity around the issue of protecting a government monopoly right there, isn't it? Isn't it...
MINISTER CONROY: We've indicated from day one that this was going to be a wholesale only government monopoly and we'd be working on a cross-subsidy which they've instated from almost the very first press conference and what this is doing is just following through on that.
PM: Ok next question.
JOURNALIST: Prime Minister you are announcing the spending of billions and billions of dollars taxpayer dollars. I still don't understand how it is not possible with the government doesn't have a ballpark figure on how much it is going to cost for a household to connect for 12 Mb per second...
MINISTER CONROY: It's actually on Page 105, it's in there. I'll throw to Mr Quigley at this point
JOURNALIST: But how do you know it's affordable, you haven't given us $30 bucks a month for 12 megabytes or $150 a month for the 100 megabytes.
MINISTER CONROY: Well the comparisons between, I'm on page 105, comparisons between what is charged in the marketplace today and they don't include, Mike correct me if I am wrong, and they don't include 30 odd bucks for line rental on top of that, so those prices are direct comparison between, and I think NBN Co in there estimate what sort of prices. What you see is they are very compatible prices for a better product, fibre versus copper, they're comparable prices.
For a better product which allows us to have the capacity to take advantage of all the new applications that will come along, but it's not based on that, and also NBN Co have made it clear that they intended to lower in both nominal and real terms all of their product prices so we are actually driving prices lower into the marketplace than they are today.
PM: One second. Now I think Senator Conroy has given you the detail and he is very much across it but I think just from absolute commonsense, absolute commonsense, wholesale price declining over time in real and nominal terms - a competitive market.
Now you'd have to be saying, you'd have to be saying if you're going to extrapolate this that you'd have to be saying to yourself the rules of competition have been suspended in this market there is nothing, no piece of evidence that could lead you to conclude that, all you would have to be saying to yourself a declining wholesale price in real and nominal terms over time is a bad thing. You'd be crazy to say that so simple commonsense.
Declining wholesale price, competitive market, competition is good for pricing so we can walk down the street look at the shops have a think about it.
JOURNALIST: The figure you've come up with is (inaudible) can you just explain for a 12 MB plan per month with a 50 gig download limit is between roughly between $53 and $58 a month. Is that what you expect of retail consumers to pay?
QUIGLEY: That is what we would calculate looking at all of the factors that a retailer would base their price on, based on our wholesale prices.
In that document you will see a comparison with other plans in the marketplace and you've got to be very careful of the headline dollar plans and then the things you have to have to add into it so we've factored those into it.
If I can also add there is one thing that we took into account which is very important is that if somebody is going to use a voice-only service, which may exist, we have an arrangement in the deal we've done with Telstra to make sure that their prices will not go up. They will pay no more today, or no more tomorrow than they are paying today.
So these plans are quite difficult to compare, you really have to look across all of the different factors that go into them and not just look at the one headline number that you see on the back of the bus.
JOURNALIST: I am just wondering what your priorities will be for the roll-out. Will you be looking for places that are the least well served by broadband at the moment to roll-out there first where it is going to be easiest to roll out, how will that work?
MINISTER CONROY: Obviously it is easier roll-out in dense inner-city areas but obviously we won't be doing just that. My life as I have said a number of times is ruled by engineers and - meet my favourite engineer - and they make their decisions based on a whole range of factors.
There is a whole range of, they travel around Australia there is a whole range of councils, of not just small areas like Barcoo and their Mayor Scott has been very vocal, but there is a whole range of centres that are banding together to put forward submissions as to why we should start there first.
This is a fantastic thing we are doing. Many of the places that have already been picked were because the communities got together and put forward a case to NBN Co and NBN Co looked at a whole range of factors and made decisions based on that so when NBN Co are making engineering decisions and they are making it based on a information that communities are putting to them as to how they can best benefit. So there is a whole range of factors.
PM: NBN Co makes those decisions. Righto, we will take a last question on NBN and then we will move. Thank you.
JOURNALIST: (inaudible) ...the percentage of people that would use the 12 Mb per second and the percentage of people who will use the faster and faster (inaudible) shows that pretty much over all up until 2028 there is only a small decrease in the number of users using 12 mega bits per second, whereas the high end users seem to be the ones that will go up to faster and faster speeds. Are we expecting from this that we will have a lot of people, the haves and the have-nots, the people who can only afford 12 Mb per second that will stay pretty much the same whereas more wealthy people will be able to afford faster and faster broadband?
MINISTER CONROY: No.
JOURNALIST: Well how does it work? This shows that the vast bulk of people will stay on that slowest broadband rate.
QUIGLEY: The slowest broadband rate, by the way, as you see in there, is better the, and across all three technologies - fibre, wireless, fixed wireless, and satellite - is better than the ADSL2 plus services today. So if you're doing downloads of web pages or whatever else this will be a very good service you get, and remember it is distance independent. It doesn't matter how far away from the exchange you are how many people are on the network, it will work just as well.
So we are expecting, and some people can say we are conservative in those estimates, we haven't predicted a huge growth in high speeds. Higher speeds will happen. I frankly, personally will be a little surprised if we didn't see those people moving through some of those higher speed tiers faster as more and more services become available. But that's the basis of our numbers that we built up in a business case.
MINISTER CONROY: We'd have been criticised if we'd tried to say well, well look seven in 10 people will start jumping to try and make the numbers look better but that's not what happened in this case. They gave a very conservative estimate, and so we can still make money even if that trajectory takes place. So we'd have been criticised by a whole range of financial markets and experts in the sector saying oh now look, they've decided now 7/10 people have got to jump to the next, in the first three days that is not what they've done. They've taken, the NBN guys have taken a very conservative approach. It is not saying that will be the outcome but it will be a very conservative approach to construct the numbers.
I do think the force of what Mr Quigley has just said to you ought not be lost in the discussion and the terminology. What is being referred to is the basic service here is faster than most Australians would ever have seen or used. That's the basic service - faster than most Australians would have ever seen or ever use. That's the basic service in the documentation. So basic is better for most Australians than they've ever seen on or used, and then you've got this huge capability beyond what is described as basic.
PM: Thank you for that, now we are happy to take questions on issue of the day, but before I do that I did want to just make some statements about Christmas Island and some updating matters there.
This morning and during the course of the weekend I received regular briefings on the situation at Christmas Island. As people would be aware on Friday the difficult decision was taken to suspend the air and sea search and rescue operation, that is because the tragic advice had been provided that it was not possible for someone to have survived at sea beyond that period of time.
I've also been updated by the Australian Federal Police about estimates of how many people were on the boat. As I have said publicly before we may never know absolutely certainly how many people were on the boat. We may never know the precise number.
But the advice to me is that the best estimate at present is that there were around 90 people on the boat. That does mean of course that we are still not able to account for around 18 people on the boat, but I do say that we may never know the total number with certainty, but that's the best advice and best estimate available to me.
What of course that means is the total number of lives that has been lost here is higher than the number of persons who have been recovered and that number remains at 30. We are of course talking about very rough seas, very rocky and difficult coastline, and so it may be that there are bodies of people who travelled on the boat that are never recovered.
So that is obviously very, very grim news and I'm sure that Australians today are continuing to reflect on this tragedy, to reflect on those that are grieving who have lost loved ones, to reflect on those who worked on this incident, the Christmas Islanders who watched from the shoreline and saw such dreadful scenes, the Christmas Islanders and the Navy and Customs personnel that went to the aid and effected the rescues.
I am pleased to say that the number of people in hospital has now reduced to one, there is one person remaining in the Perth Hospital, but the other people evacuated to the Perth Hospital and the people who have been in the Christmas Island Hospital have now been discharged, but are obviously our thoughts continue to be with people who are injured following this very tragic incident. As people would be aware there are memorial services that are occurring for those who have survived and also for people in the Christmas Island Immigration Detention Facility, those services are obviously playing a role as people grieve and mourn their losses.
The Christmas Island community at the appropriate time will also have a community memorial service, the best timing of that will be determined by the Christmas Island community itself. Christmas Island is a place where many people travel from Christmas Island back to mainland Australia for the Christmas New Year period and so the Christmas Island community will work through as to what is the best time to have the memorial service so that community members in the largest possible numbers have the ability to participate in it.
Of course counselling services continue to be available both for those who have survived to incident itself and for the Christmas Island community as they deal with the burdens on them from this day and having seen what so many people saw from the shoreline and having participated in rescue efforts.
So the news from Christmas Island will I'm sure continue to weigh heavily on Australians and particularly the loss of life will weigh very heavily on Australians.
I'm very happy to take questions on that or any other matter.
JOURNALIST: Notwithstanding the management of this particular incident at Christmas Island, do you see any case for changes to the government's policy in relation to unauthorised boat arrivals, either strengthening of the policy or an (inaudible) of the current deterrent?
PM: The government will continue with its policy and as is well known we are seeking to add to it with a Regional Protection Framework and Regional Processing Centre.
When we look at the government's policy we've got more assets patrolling our borders than we've ever had before, we have a rigorous mandatory detention policy, we have increased penalties for people smugglers, particularly for people smugglers who cause loss of life, whose conduct causes loss of life.
We are continuing to work with our region and invest in our region to assist law enforcement capabilities and we have disrupted around 240 people smuggling ventures and we've enjoyed some success in arresting people smugglers, both in our region and in Australia itself.
We will continue with those policies. We do though want to smash the people smuggling business model, we do want to take out of the hands of people smugglers the very evil product that they sell and that is why we are working on a Regional Protection Framework and Regional Processing Centre.
JOURNALIST: (inaudible) actually help smash that people smuggling racket, or do you think it would make it more attractive.
PM: Look, the government's got no plans to increase the humanitarian intake. Obviously the government takes decisions about immigration numbers in all classes from time to time, but we've got no plans to do that.
What I would say is the people smuggling business model will be there for however long people think to themselves if they pay a people smuggler and risk their life at sea that they will be processed and dealt with in a different way than if they stayed where they are, which is why the Regional Protection Framework and Regional Processing Centre is about smashing that business model. It's about saying to people if you get on a boat, pay a people smuggler, risk your life at sea, even when you reach Australia what will happen is you are returned to the Regional Processing Centre, so you do not get an advantage by having paid a people smuggler. That is our aim.
JOURNALIST: An extension on that question is in relation to the intake and the composition. According to the UNHCR, Indonesia has something like 17,000 people who are registered as asylum seekers, 798 who are refugees.
Australia will only take 500 of those, if you're not going to change the size of the intake but the composition, could you take more from Indonesia where there is obviously a lot of people waiting to come to Australia to take some of the pressure, to therefore stop people making these perilous journeys.
PM: Look I think we've got the be a bit practical about this and if we are going to be a bit practical about it, what we have to say to ourselves is around the world there are millions of people on the move seeking to make asylum claims. We see it throughout Europe, there is travel throughout Europe and tragically we've seen loss of life in that travel too, people would be familiar the instance of people who have smothered in the backs of vans making transits across Europe. So there are literally millions of people on the move.
The size of our humanitarian intake needs to be determined by the Australian government, we're a compassionate and generous people and we step up and do more than our fair share in terms of taking refugees from refugee camps around the world, so we do have an intake there.
Now in terms of what would break the people smuggling model, it seems to me you couldn't say well if you move into one country and take more caseload that you won't see more people arriving and replacing the caseload that you've taken, that I think is the problem with the argument you put. What we need to do is we need to smash the people smuggling business model itself.
JOURNALIST: What do you make of criticism of mining companies of the government handling of the resources super profits tax and the claims that the government wasn't straight with the industry? Do you have confidence that you and the Treasurer, who is the subject of some of this criticism, will be able to push through whatever cynicism there in the mining sector to get an outcome on the new tax?
PM: Well, I'm very happy to take that question. If the Treasurer wants to say something, then he will.
We see lots of huff and puff in newspaper articles with no names in it, lots of huff and puff. Meanwhile, in the real world, the policy transition group processes are working well. We will deliver the policy transition group report shortly.
We are in positive discussions and on a positive pathway with the mining industry. That's the real world.
TREASURER: And I just to make this point - this has been a tough debate. It's not surprising to see all sorts of claim and counterclaim. The Government had always determined to include the mining tax in the budget, because as you would well remember the centrepiece of the budget, the centrepiece of our response to Mr Henry's report, was to deal with the challenges of Mining Boom Mark II, and to deal with the challenges of Mining Boom Mark II we needed to have lower rates of corporate taxation overall; we needed to be able to invest in infrastructure, particularly in mining regions which are under such tremendous pressure; and also to build our national savings. The only responsible thing to do in those circumstances was to include all of that in the Budget. Could you imagine what people would have said if we hadn't included that in the Budget?
JOURNALIST: (inaudible)
PM: Hang on, hang on, we'll take it one at a time. Settle down and we will allow Matthew another one. I don't quite know why but an overwhelmingly Christmas generous urge is coming upon me. Matthew?
JOURNALIST: Well, Treasurer, even in your own state of Queensland, Anna Bligh has said yesterday that she believes that with regard to the negotiations for the new tax, your commitment was clear, that it would cover-
TREASURER: -Matthew, whether it was the old tax, or whether it was the new tax, under either arrangement there was no way in the world that royalties could keep going up willy-nilly. It's just not common sense.
But look, we'll work our way through this in a sensible way. As the Prime Minister said, the Argus group, the committee, the Policy Transition Group, has worked well because I think everybody understands an outcome here is good for Australia. It's good for certainty and what we are doing through that group - and the report will be released before Christmas - is bringing the certainty through. That's a good thing. That's what the industry wants. That's why the Prime Minister worked so closely with the industry to resolve the design. This group was an outcome of that process, and we will work cooperatively with the industry and the States to resolve all of the issues, but I think it's going pretty well.
JOURNALIST: Treasurer, Anna Bligh has made the point that in the Heads of Agreement, which you both signed, all referred to all royalties, including future. Is that correct - and I understand of course that previously it wasn't the case. Does all mean all in the Heads of Agreement?
TREASURER: We will receive the report from the Argus group, as I said, before Christmas. We'll deal with these issues.
As I've already indicated before, nobody sitting around the table thought that there was going to be some green light for state royalties to go up forever, not the Queensland Government, nobody thought that.
We get all sorts of claim and counterclaim now. We'll deal with this because this is good for Australia, good for the mining industry, and particularly good for great mining states like Queensland and WA, but we'll work our way through those issues. We've got the Argus report coming through. The Government will respond to that in a careful way and deal with all of these issues.
JOURNALIST: But for a State like WA where the GST share is going to be dropping over the coming decade - every single year it's going to drop - the temptation will be to increase those royalties. To decode what you've meant by willy-nilly, are you saying that the Government will accept some increase to royalties or nought?
TREASURER: I'm not saying that at all. It is simply common sense that States, for example, that have increased their royalties in recent times, would not be contemplating doing that again willy-nilly, so I don't necessarily anticipate this happening. Now, some states have done that-
JOURNALIST: -(inaudible)
TREASURER: Well, I don't think so, because you know what? I don't think it would be good for the mining industry and I don't think it would be well received by the mining industry, but there are legitimate issues involved here. There are wider issues of federal-state financial relations. We will deal with those through the normal processes, through the COAG process. We're awaiting the report from the Policy Transition Group.
We'll deal with this in a methodical, sensible and commonsense way, but there will be claim and counterclaim, but in the middle of all of that this is a very, very big advance for Australia - a stream of revenue to boost savings, invest in infrastructure and lower tax for business.
PM: Can I just add to that before we take the next two questions, and perhaps this may cause people to think some of these issues through again, most of this questioning is proceeding on the assumption that there is some intractable problem here that can't be solved. That assumption's completely untrue.
We're on a positive pathway, working through the policy transition group - which is working well. As the Treasurer says, we will deliver its outcomes before Christmas. We will continue to work through a bit of huff and puff from unnamed sources in newspapers - doesn't affect that reality where people are sitting down, working things through and have been doing it in a positive way leading to the policy transition group report.
JOURNALIST: Prime Minister, the miners and the mining states weren't lulled into a false sense of security, were they, before an election, to think that the state royalties would be rebated and covered by the MRRT and the Government's tax scheme-
PM: -The mining industry, through the policy transition group process, is working through in a positive way with Government. That is the reality of what's happening.
TREASURER: Can I just make this point-
JOURNALIST: (inaudible) before an election-
TREASURER: No, no.
PM: No. How absurd, and an assumption you'd only come to if you weren't dealing with the reality of this and the reality of this is very clear - I entered an agreement with the mining industry. We have had the policy transition group to work through bringing that agreement to life, and then, of course, at the appropriate point, we'll have legislation which people will be able to comment on.
The policy transition group process, which is bringing the agreement into life, is working through positively. That's the reality.
TREASURER: I just want to add one thing to that. This is very important, because when you put a fundamental reform like a resource rent tax in place there is always going to be claim and counterclaim. This is a very significant change and you will get those who will oppose it. You'll get those who will support it.
Our job is to look after the national interest, and the national interest is served by a tax like this one - well designed, there's been strong consultation with industry, and implemented so we can deal with the challenges of Mining Boom Mark II.
I don't expect that people will be on the sidelines saying everybody in the industry is necessarily in agreement with the outcome, but the outcome is a good one for Australia, but what you do run into here is really strong, powerful and loud vested interests.
Now, what the Prime Minister achieved was a very good agreement with the industry - a breakthrough agreement. Coming from that has been this process led by Mr Argus in which the industry has all been involved.
I'm sure when industry sees the outcome there will still be people who won't agree with the outcome, but there will be a substantial group of people who recognise that it is in Australia's national - interest including people in the mining industry.
JOURNALIST: (inaudible)
PM: OK, just take these at the front, and then I think we're going for a world record here. Yes, I think you're, Katherine?
JOURNALIST: Prime Minister, the benefits of sitting in the front row of this room, you can see a lot more than when you're down the back. I've just noticed a lovely big ring on your left hand and I'm just wondering if someone engaged our Prime Minister?
PM: Right, we've got to that stage in a press conference where it's all got a bit silly. No, I've had that ring for a long period of time, and I miscellaneously wear it on my left hand or my right hand depending on how much hand writing I'm doing because I don't know about you, but I find if I work a long period of time writing with rings on my right hand then they start to hurt, and so then I slip it onto my left hand.
If it'll make you feel better I'll slip it back onto the right hand.
JOURNALIST: Is it (inaudible)
PM: No, it's not.
JOURNALIST: On a perhaps less important matter, overnight the US Vice President, Joe Biden, declared Julian Assange as a type of high-tech terrorist. Is that a view you agree with, and how do you feel about an Australian citizen engaged in the type of activities he's engaged in being described as a terrorist?
PM: Well, look, I've made my views well known here. I think the conduct in relation to WikiLeaks has been grossly irresponsible. Now, I know it's got some fans in some places but I think it is grossly irresponsible. I think it risks damaging the interests of individuals named and it risks damaging the US national interest, and of course the interest of the US and its allies. That's my analysis.
I'm not going to adopt anybody's form of words. That's my form of words. That's what I believe.
JOURNALIST: Does it worry that an Australian citizen has labelled a terrorist?
PM: Well, Mr Assange can obviously deal with these questions himself. He has world-class access to the media if he seeks to respond on that matter.
JOURNALIST: Are you back on holidays now, Prime Minister, after today, or-
PM: -I've come to spend some time with you, and I've got a few more things to do, so I'll be around.