American Chamber of Commerce

Thursday, 20 November 2008

Good afternoon everyone.

As you are acutely aware, these are serious and challenging times for economies right around the world.

The world has changed since the election of the Rudd Government 12 months ago.

We are currently experiencing global financial turmoil the likes of which we have not seen since the Great Depression.

The global financial crisis is real and it is having real impacts around the globe.

While the Australian economy is fundamentally sound and underpinned by a world-class regulatory framework, we are of course, not immune from these international events.

The recently released Mid-Year Economic Forecast predicts weaker GDP growth, and rising unemployment levels in Australia, compared to what we forecast in our May 2008 Budget.

These are clearly serious challenges.

The Rudd government has responded to the challenges of these changed international circumstances by taking decisive and early action.

• We moved quickly to guarantee the bank deposits of all Australians, and provide a wholesale funding guarantee to our authorised deposit taking institutions;
• We developed a $10.4 billion Economic Security Strategy, designed to stimulate economic activity and to protect the vulnerable in our society;
• And we continue to work closely with our international counterparts to address the current crisis - including participation in the recent G20 meeting.

In parallel, the Reserve Bank of Australia has announced a series of interest rate cuts since the start of the crisis - a 100 basis point cut in October, and a 75 basis point cut in November.

These actions mean that fiscal and monetary policy are now working in tandem, to help strengthen the economy and protect households during the global financial crisis.

While the Government is acting decisively in response to the global financial crisis, it is important that we don't lose focus on the future.

Long-term infrastructure investments are essential to drive productivity and secure prosperity for the future.

That's why the government is engaging in nation building projects like the National Broadband Network.

The National Broadband Network is a critical infrastructure platform for Australia's participation in the digital economy.

From a quick glance around the room today, I know there are a lot of people here with a very keen interest in Australia's digital future.

The digital economy promises many opportunities for growth and development.

It opens up entirely new markets for existing businesses, as well as new, more efficient ways for businesses to serve their existing customers.

It creates new ways for citizens to organise and have their say, and new ways for government to respond, and to deliver public services.

Broadband infrastructure is a vital enabler for this emerging environment.

It is the infrastructure foundation for digital innovation, and the platform for new and emerging services.

Governments around the world are recognising the importance of broadband.

They recognise its fundamental link to the digital economy.

They recognise its role in ensuring future economic and social prosperity.

The Rudd government fully recognises the importance of broadband, and indeed, the National Broadband Network will be one of the largest infrastructure investments undertaken by any Australian Government.

It will be a vital building block for Australia's future economic productivity and prosperity.

As I am sure you are aware, we are now reaching the crucial stages of the NBN process.

I am looking forward to next week when proponents will submit their final proposals for Australia's broadband future.

Australia's future depends on our ability to harness the potential of broadband and the benefits it will bring.

As it did in Australia in 2007, broadband also played its part in the recent election in the United States.

While Barack Obama took political campaigning to new levels via the web, he also reached out to a public who - like Australians - understand the requirement for digital ambition.

Obama has identified digital technology as a key requirement, for improving America's innovation and competitive standing.

And, part of his plan is the deployment of next-generation broadband.

As Obama said during the campaign, "It is unacceptable that here, in the country that invented the Internet, we fell to 15th in the world in broadband deployment."

While the approach in the US will be different, the vision is the same - to enable the digital economy and ensure maximum benefit for all sectors of the economy.

Here in Australia, it is also unacceptable, that we lag so far behind comparable nations when it comes to broadband penetration, speed and price.

In fact, the latest OECD figures for its 30 member countries rank Australia:

• 16th on penetration levels,
• 20th on cheapest subscription prices, and
• 9th on broadband speeds.

Telstra admitted in July this year, that because of legacy network limitations, two thirds of metropolitan areas and more than half of our regional population, cannot access broadband speeds of 12Mbps per second.

Similar figures were reported by Terria last year.

This is consistent with the fact that every month, thousands of people contact my Department to complain they cannot access high-speed broadband, including in metropolitan areas.

I'm pleased to say that we are not alone in recognising the need for major broadband investment in Australia.

Business, state, territory and local governments and the general public are all of a common view.

They all understand that broadband will play a vital role in our economic future.

This view was highlighted by the strong endorsement of the National Broadband Network, provided recently by an Australian Industry Group survey of business leaders.

The survey included companies from a diverse range of sectors:

• business services,
• chemicals and petroleum,
• manufacturing,
• metal fabrication,
• finance, insurance and property,
• machinery and equipment, and
• commercial construction, to name just a few.

The results indicated overwhelming support from business for the National Broadband Network project.

More than 85 per cent of CEOs reported internet access as highly important to their business.

More than 93 per cent said the internet has a positive impact on productivity.

70 per cent see a strategic advantage in broadband internet.

According to the survey, around one third of key business activity is already being conducted over the internet, including for financial activity and data transfer.

However, the results also indicate a strong requirement for improved access to reliable and affordable broadband.

Two-thirds of CEOs said their businesses would benefit greatly from a faster network.

They indicated an urgent need for an effective, truly national high-speed broadband network, to encourage take-up of new applications and services.

The survey suggests that without the National Broadband Network, Australian industry, and the overall economy, will forgo efficiency and productivity gains, and other commercial benefits.

Australian industry is ready and willing to embrace digital technologies powered by high-speed broadband.

It has a strong desire to link with government to drive this agenda.

Australian industry recognises broadband as a vital driver for innovation and productivity, two key factors that will underpin our future national economy prosperity.

The Rudd Government welcomes this sentiment, because we too understand the vital need for a world-class, reliable, affordable, high-speed broadband service.

Infrastructure investment has been sorely lacking across the economy.

We have made clear that our investment priorities should:

• lift national productivity;
• drive Australia's international competitiveness;
• develop our cities and regions;
• reduce greenhouse gas emissions; and
• improve the quality of life of all Australians.

Broadband fits all of these criteria.

Investing now will help Australia manage the current global economic conditions.

As I've said previously, broadband offers opportunities across all sectors of the economy.

The benefits are far-reaching: from manufacturing and distribution, to regional business, to health and education.

In Victoria more than 90 schools are already benefiting from a broadband network providing opportunities that could otherwise be inaccessible, due to cost or distance.

High-quality audio and real-time video allows students to interact across multiple sites - sharing information and learning experiences.

It offers the potential for virtual excursions and allows specialist teachers to reach multiple classrooms at once.

At another level, Swinburne University astronomers are using broadband to obtain images from the Parkes telescope in Western NSW.

High-speed digital connectivity has cut months from the information gathering process and - according to researchers - could put Australia ahead of the world in scientific discovery.

In the health sector, hospitals are already using broadband technology to improve patient care.

In regional Western Australia, work is underway to deliver remote medical diagnosis and treatment services to almost 80 sites.

Patients, country GPs and hospital staff can use telehealth to consult with specialists across the state, improving treatment, and potentially removing the need for disruptive travel for as many as 450,000 people.

It is in operation now and will only improve as we push forward to overhaul Australia's broadband infrastructure, including in regional areas.

As these examples demonstrate, we are witnessing a major shift in thinking across the economy.

Without reliable, affordable high-speed broadband, government services and businesses of all sizes will be left behind our global competitors.

Take the manufacturing sector as another example.

This sector has the opportunity to drive entirely new efficiencies - using digital technologies to gain oversight of products from conception to disposal.

Bernard Charles, President and CEO of one of France's major manufacturers recently said:

"In the future, all manufactured goods in the world will be digitally defined, engineered, simulated, produced and managed throughout their lifecycle."

Simply from a transportation perspective, digital tracking technology is already assisting manufacturers by allowing intimate control of the distribution chain.

Lifecycle management also has implications for governments, which will use digital technologies to improve the way public assets are planned, constructed and maintained.

A road network with connected sensor technology could send alerts about surface and foundation conditions in real-time, meaning better planned and targeted repairs.

As Larry Smarr, one of the founders of the internet, pointed out in a recent talk in Canberra - these technologies will reshape the way we think about infrastructure management - and result in savings for everyone.

In the energy sector, companies such as Country Energy plan to use broadband to improve the way they monitor and manage power distribution.

In New South Wales, Country Energy is testing intelligent network technology to provide it with specific, real-time data on energy usage.

This is hoped to improve grid infrastructure management and deliver improved efficiency, more reliability and increased penetration of small renewable generators.

Country Energy suggests that working towards these objectives using connected, digital infrastructure will help it combat the long term costs of shifting to renewable energy.

Importantly in the current environment, the improved use of telecommunications could also result in energy and travel costs savings for business.

In fact, a late 2007 report by Climate Risk estimated that these savings could be worth up to $6.6 billion dollars annually.

It noted a number of major opportunities for communications to improve energy efficiency, including:

• Remote appliance power management,
• De-centralised business districts,
• Real-time freight management,
• Increased renewable energy, and
• High Definition video conferencing.

These are exactly the kind of applications that will be made possible, by the greater availability of affordable, high-speed services via the National Broadband Network.

As I have said, broadband is essential enabling infrastructure for all sectors of the economy.

Throughout the world, it is already helping governments, businesses and citizens do what they have always done more efficiently - and helping them to do things that they have never done before.

This is the digital economy.

Of course, creating the best environment for the digital economy is not without its challenges.

However, the Rudd Government is determined to take on those challenges with utmost resolve.

I'm sure many of you here today have noted the robust public debate on the sidelines of the National Broadband Network tender process.

This has particularly been the case in the area of future regulatory settings.

When we put $4.7 billion on the table to invest, we anticipated, and encouraged this debate.

It is fair to say that we have not been disappointed.

But the Government is focused on outcomes in the NBN process, not regulatory totems.

We remain open-minded on the regulatory tools that may achieve our stated goals, and to provide investment certainty to all players in the market.

Our view, as I have stated previously, is that prescribing specific regulatory settings at the start of this process would have unnecessarily narrowed the scope for innovation and competitive tension.

We have put forward 18 clear objectives in the Request for Proposals.

These include:

• a minimum 12Mbps to 98% of homes and businesses,
• allowing consumers the choice to run applications, use services and connect devices at affordable prices,
• fibre-to-the-node or fibre-to-the-premises network architecture, and
• competition and equivalency through open access arrangements.

It is up to proponents to demonstrate how best to meet - or exceed - our objectives, within the competitive process.

I am looking forward to the response from proponents next week.

But of course, the digital economy is not only about infrastructure and access.

It is also about opportunity and securing our long-term prosperity.

We need to be working right now, to ensure Australia is best-positioned to make the most of our infrastructure investments.

We need to ensure we have the skills, business models and legal settings in place so that we hit the road running.

The Rudd Government understands this and is taking action today to develop Australia's digital economy.

We have been consulting throughout the year with the private sector, canvassing future developments and the aspirations for our digital economy over the next five years.

Through this process we uncovered some of the key areas of focus needed to stimulate digital uptake - areas such as capability, confidence, and content.

Importantly, these discussions led to a consensus on the need to develop a road map for the future of the digital economy in Australia.

In response, we are developing a Digital Economy Future Directions Paper for early 2009, to outline the benefits and opportunities that the digital economy offers the country.

It will also describe the respective roles of government and industry in ensuring that Australia realises the full benefits on offer.

It will chart our digital future.

Along with our investment in the National Broadband Network, it will form the foundation for our digital economy.

It will help create an environment where all sectors of the economy have the best opportunity to fully exploit the possibilities.

Australia deserves to be a digital leader and in these current uncertain economic times, it is clear that we should be embracing all the opportunities that the digital world provides.

With the action being taken today and the concerted interest of people like those in the room today, we are on the track to achieve that goal.

Thank you.