2 July 2012 Mr Josh Taylor Journalist ZDNet Sent via email: josh.taylor@zdnet.com.

.au Dear Mr Taylor, FOI Application I am writing in relation to your request made under the Freedom of Information Act 1982 (the FOI Act). In particular, you were seeking access to documents concerning security issues relating to Huaweis tenders to NBN Co. The Statement of Reasons (Attached) outlines the specific terms of this FOI request, the decision-makers findings and the access decision. For your reference, this decision is subject to review under sections 53A and 54 of the FOI Act. The Office of the Australian Information Commissioners FOI Fact Sheet 12 Your review rights is attached for your information and may be found at the following link: http://www.oaic.gov.au/publications/fact_sheets/FOI-fact-sheet12_your-rights_online_April2011.pdf If you have any questions or need to discuss your FOI application, please feel free to contact the writer on Tel. (02) 8918 8596 or via email on davidmesman@nbnco.com.au. Sincerely, Our Ref: FOI11/12-17.72

David J Mesman Senior Corporate Counsel FOI and Knowledge Management

cc. Justin Forsell, Chief Legal Counsel, NBN Co

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FREEDOM OF INFORMATION REQUEST 1112A/17 Josh Taylor ZDNet ACCESS DECISION STATEMENT OF REASONS

Background

1. NBN Co Limited (NBN Co) is a government business entity (GBE), which has the mandate of realising the Australian Governments vision for the development of a next generation national broadband network. 2. NBN Co recognises that information is a vital and an invaluable resource, both for the company and for the broader Australian community. That is why NBN Co fosters and promotes a pro-disclosure culture, with the goal of creating an organisation that is open, transparent and accountable. In that light, members of the public will be able to find a large amount of information freely available on our website. 3. In addition, NBN Co manages its information assets within the terms and spirit of the Freedom of Information Act 1982 (the FOI Act or the Act). We also endeavour to release information proactively, while taking into account our commercial and other legal obligations. 4. Subject to relevant exemptions, the FOI Act gives the Australian community the right to access documents held by Commonwealth Government agencies, as well as prescribed authorities, such as NBN Co. 5. Under subsection 23(1) of the FOI Act, the Chief Executive Officer of NBN Co has authorised me, David Mesman, to make decisions about access to documents under the FOI Act. 6. Under section 26 of the FOI Act, I am required to provide a Statement of Reasons for my decisions in relation to FOI access applications. I am also required to set out my findings on any material questions of fact, referring to the material upon which those findings were based.

Application Chronology and Terms of Request

7. On 23 March 2012, NBN Co received an FOI request from Josh Taylor at ZDNet (the Applicant), which sought emails and memorandums within NBN Co relating to Huawei and NBN tenders. 8. On 28 March 2012, I wrote to the Applicant, requesting that he contact our company to assist in refining the scope of this request. As per section 15(2)(b) of the FOI Act, I advised the Applicant that the request in its then-current form was not sufficiently precise to enable NBN Co to identify the relevant documents. As such, NBN Co could not commence the processing of the application. In addition, I suggested that the Applicant contact NBN Co to discuss the terms of this application and consider limiting its scope to the following: specific types of documents (such as final memoranda); and documents provided to or sent to specific officers or executives within the company; and a specific time frame in which all requested documents were produced; and exclude certain classes of documents (such as draft, confidential, legally privileged or documents to which secrecy provisions may apply).

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9. On 28 March 2012, I also spoke with the Applicant, informing him that it was likely that the request, in its thencurrent form, would constitute a diversion of resources, as per sections 24 and 24AA(1)(a)(i) of the FOI Act. In particular, the request would have required NBN Co staff to undertake extensive searches through its entire electronic filing system and the email logs of approximately 1400 staff members. Based upon the above advice, the Applicant agreed that NBN Co would commence a preliminary scoping exercise to determine whether the search terms (below) would also constitute a diversion of resources: Emails and memoranda/briefs relating to security concerns over Huawei tenders dating from 1 January 2010 to the present, but: Excluding draft documents, i.e. only final documents/memoranda; Excluding Cabinet Documents and legally privileged documents; Excluding hard copy documents; and Only including documents sent/received by the CEO and his direct reports.

In addition, the Applicant agreed that the formal processing of this application would not commence until the company had completed its preliminary review of (primarily) email files. NBN Co also indicated that the company would not charge processing fees for these preliminary searches. 10. On 11 April 2012, I emailed the Applicant to provide an update regarding the preliminary search. In particular, I indicated that NBN Cos Information Technology (IT) staff had run relevant searches and began an initial review of an email data set. It should be noted that the original data set included hundreds of thousands of documents, as it had captured every single email received and sent by our executive team during more than two years and without reference to specific search terms. 11. On 12 April 2012, I emailed the Applicant and confirmed that it would take approximately a full day (or more) of NBN Co IT staff time to begin culling documents and emails. I advised the Applicant that NBN Co staff would be in contact in due course regarding the outcome of those searches. 12. On 19 April 2012, I spoke with the Applicant, indicating that the IT searches were taking longer than expected. I also advised the Applicant as to the refined search parameters used by NBN Co IT staff. 13. On 24 April 2012, NBN Co staff had a teleconference with the Applicant, who agreed to exclude certain administrative documents and other information from this FOI request. Following an email to the Applicant, NBN Co acknowledge receipt of the application, as required by section 15(5) of the FOI Act and confirmed its terms as: Emails and memoranda/briefs relating to security concerns over Huawei tenders dating from 1 January 2010 to the present and only including documents sent/received by the CEO and his direct reports, but excluding: Draft documents, i.e. only final documents/memoranda; Cabinet Documents and legally privileged documents; Hard copy documents; Documents not originating from NBN Co, such as corporate sales or pitch documents and not dealing with tender security matters; Documents concerning administrative matters, such as setting up meetings; and Documents containing information already in the public domain, such as media alerts.

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14. On 2 May 2012, I telephoned the Applicant and provided a rough estimate of the processing time required to complete this application, being approximately 25 hours. In addition, I advised the Applicant that I had reviewed the relevant documents in a summary fashion. While not making a formal decision, I indicated that it would appear that many documents would likely be exempt from release on various grounds, including NBN Cos commercial activities. Despite the above advice, the applicant indicated that he was happy to proceed with this FOI request. 15. On 3 May 2012, I wrote to the Applicant, indicating that NBN Co had estimated the processing fees to be $550 and requested an advance deposit of $112.50. The processing fees were based on a search and retrieval estimate of 10 hours and an additional 20 hours for decision-making time, with the first 5 hours of decision-making time being free of charge. In addition, NBN Co advised the Applicant that it would be required to undertake third party consultations, which would require an extension of the decision-making period by 30 days. 16. On 3 May 2012, the Applicant wrote to NBN Co, requesting that the FOI processing fees be reduced or waived based on public interest considerations. On the same day, NBN Co wrote to the Applicant, requesting that he provide more detailed reasons to support his fee reduction request under section 29 of the FOI Act. In particular, NBN Co directed the Applicant to the Office of the Australian Information Commissioner (the OAIC) FOI Guidelines at paragraph 4.51 and following, which may be found at: http://www.oaic.gov.au/publications/guidelines/Part4_Charges_for_providing_access.html. 17. On 4 May 2012, the Applicant provided additional reasons for his fee reduction request. In particular, the Applicant indicated that there was strong public interest in: proper media scrutiny of the government's decision to ban Huawei from tendering for the NBN, and clearly as NBN Co is the company that is acting on this government policy, it is important we're informed about what NBN Co has been told. There has been much media attention paid to the ban when it was revealed in March. Both the Greens and the Coalition have been highly critical of the decision (www.zdnet.com.au/libs-slam-huawei-ban-greens-wantexplanation-339334548.htm) but the government has done little to explain to the public on what basis the decision was made. It has been suggested that the ban could damage our international relations with China (http://www.zdnet.com.au/china-lowers-au-telecoms-prices-downer-339336096.htm), and given the importance that China is as a trading partner to Australia, it is in the public interest that the media is given all the information behind the ban. 18. On 11 May 2012, I wrote to the Applicant and provided a formal Charges Decision, along with a Statement of Reasons. As per Regulation 3 of the Freedom of Information (Charges) Regulations 1982 (the Charges Regulation), a decision-maker has a general discretion to impose or not impose a charge, or impose a reduced charge for the processing of an FOI request. In that context, I exercised my discretion and provided a 50% reduction in the processing fees. As outlined in my Charges Decision, the 50% reduction took into account the public interest in this specific issue. At the same time, it ensured that NBN Co is able to appropriately account for its staff members time and resources and in the same manner as any other commercial entity. 19. On 14 May 2012, I wrote to the Applicant and provided a revised processing fee estimate. In particular, I informed the Applicant that he would be required to pay $225 in processing fees, with a $56.25 advance deposit required.

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20. On 16 May 2012, NBN Co received the Applicants advance deposit payment and continued with the formal processing of this request. 21. On 23 May 2012, I advised the Applicant that NBN Co would be required to seek advice from the Commonwealth Attorney Generals Department (the AGD) in relation to relevant documents within the scope of this request. As NBN Co would be undertaking consultations with Commonwealth Government entities and not in relation to those entities business affairs, our company would not be permitted by the FOI Act to extend the decision-making period by 30 days. As such, the formal due date for this application would be 4 June 2012. However, I informed the Applicant that the AGD would not be able to provide advice until late in the first week of June (at the earliest). As a result, NBN Co requested that the Applicant approve an extension of the decisionmaking period to 18 June 2012, as permitted by section 15AA of the FOI Act. In addition, NBN Co indicated that it would waive the processing charges in light of the delay in making its access decision. In that context, the Applicant agreed to extend the decision-making period to 18 June 2012. 22. On 18 June 2012, I contacted the Applicant and indicated that NBN Co would be required to undertake additional third party consultations in particular, with the Department of Broadband, Communications and the Digital Economy (the DBCDE). In discussions with the Applicant, I indicated that it would likely take two weeks to obtain advice from the DBCDE and complete the decision. However, I undertook to complete the FOI decision earlier if possible. The Applicant agreed to extend the decision-making period to 2 July 2012. 23. On 2 July 2012, I made my access decision, as outlined below. On the same date, I finalised and forwarded the decision to the Applicant. In total, NBN Co FOI staff spent approximately 32.5 hours in reviewing and identifying documents, undertaking consultations, drafting and finalising this FOI decision. In addition, other NBN Co staff spent 8.5 hours in searching for documents, providing advice and undertaking administrative tasks related to this FOI request. As permitted by the Charges Regulation and the objects of the FOI Act, I exercised my discretion and waived all fees associated with this FOI application. In that context, NBN Co reimbursed the Applicants advance deposit payment.

Findings of Material Fact

24. Following receipt of the Applicants request, NBN Co staff undertook extensive searches through the companys hard copy, electronic and other files. In particular, NBN Cos IT Group undertook key word searches through the companys email system to locate documents sent to and from NBN Cos executive team. Those searches produced hundreds of thousands of documents. As a result, NBN Cos IT staff were required to refine the search parameters. This enabled NBN Co to eliminate irrelevant documents and to identify documents that fell within the search terms outlined above. 25. NBN Co also undertook targeted document searches in a number of relevant work streams and functional areas within the company, being NBN Cos Security Office, Procurement, Company Secretary and the Office of the Chief Technology Officer. 26. After its review of the above sources, NBN Co staff identified 10 documents as falling within the scope of this FOI request. At the end of this Statement of Reasons, the Schedule of Documents provides a list of the documents within the scope of this request, along with identifying details, where appropriate. 27. To assist in making my decision, I sought advice from relevant officers within the work groups mentioned above, along with NBN Cos Executive and Legal Teams. I also sought advice from internal business experts regarding

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the commercial nature of the identified documents as well as other relevant details to assist in making an informed decision regarding potential exemptions. 28. As mentioned above, the AGD provided NBN Co with advice and objections to the release of certain documents as per the national security exemption (section 33 of the FOI Act). Due to the nature of that exemption and the AGDs advice, it is not possible to provide substantially detailed reasons regarding those exemption claims. 29. I also undertook consultations with the DBCDE in relation to Document 9, as identified in the attached Schedule of Documents. The DBCDE provided me with comments and objections relating to that document. In addition, the DBCDE indicated that it was of the opinion that Document 9 was not within the scope of this request. While I generally accepted the DBCDEs comments and objections, I did consider that Document 9 was generally within scope of this request.

Access Decision
Potentially Exempt Material Statement of Reasons 30. In making this access decision, I turned my mind to the issue of whether it would be appropriate to consult with Huawei in relation to potentially exempt information contained in this Statement of Reasons. This is required by section 26(2) of the FOI Act, which enables a decision-maker to exclude information from a Statement of Reasons (or a similar notice), if the information would reveal exempt information. The relevant section of the FOI Act reads as follows: A notice under this section is not required to contain any matter that is of such a nature that its inclusion in a document of an agency would cause that document to be an exempt document. In particular, I considered the terms of this FOI request and the references to security concerns relating to Huaweis NBN Co tender bids. In light of that phrasing, an argument could be made that a decision-maker could have been required to undertake consultations as per section 27(1)(b) of the FOI Act. Based on the terms of this FOI request and the fact that this document may be made public, Huawei might reasonably wish to make an exemption contention in relation to its business affairs (ss. 47G) or the fact that it could disclose commercially valuable information (s. 47). 31. Drawing from the above provisions and the OAIC FOI Guidelines, I came to the conclusion that the references to Huawei in this Statement of Reasons would not found an exemption claim under the FOI Act. I base this conclusion on section 27(3)(c) of the FOI Act, which enables a decision-maker to consider, among other factors, the availability of the information from publicly accessible sources. To the extent that information is already in the public domain, it is unlikely that a document would be the subject of an exemption claim. In that context, this Statement of Reasons and related documents only reference information already in the public domain, such as that found at http://www.pm.gov.au/press-office/transcript-joint-pressconference-sydney-1. In addition, the Australian media extensively covered the issue of Huaweis tender bid to NBN Co. As such, I determined that the references to Huawei in this decision would not cause this document to be an exempt document, as per section 26(2) of the FOI Act.

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Commercial Activities Exemption Preliminary Assessment (Documents 1 to 8 & 10) 32. Section 7(2) of the FOI Act exempts certain persons, bodies and Departments from the operation of the Act in relation to documents specified in Part II of Schedule 2 of the Act. Part II of Schedule 2 to the FOI Act specifies that NBN Co is exempt from the operation of the FOI Act in relation to documents in respect of its commercial activities. As per section 7(3A) of the FOI Act, commercial activities mean: (a) activities carried on by NBN Co on a commercial basis; or (b) activities, carried on by NBN Co, that may reasonably be expected in the foreseeable future to be carried on by NBN Co on a commercial basis. 33. In relation to any FOI application, I am required to consider if any relevant documents fall within the definition of commercial activities and, as a threshold question, whether they are subject to the operation of the FOI Act. However, I am reticent to consider the commercial nature of Documents 1 to 8 & 10, as they are the subject of national security exemption contentions made by the AGD, as outlined below. If I were to provide reasons or consider whether Documents 1 to 8 & 10 contain commercial information, I may inadvertently reveal exempt information (as per section 33 of the FOI Act) or commercially sensitive information (as per sections 7(3A) or 47 of the Act). As such, I will not undertake a preliminary assessment as to the commercial nature of Documents 1 to 8 & 10. In addition, I will not confirm, nor deny that these documents are, in fact, documents in respect of NBN Cos commercial activities. I base this decision on section 25 of the FOI Act, which reads as follows: Information as to existence of certain documents (1) Nothing in this Act shall be taken to require an agency or Minister to give information as to the existence or non-existence of a document where information as to the existence or non-existence of that document, if included in a document of an agency, would cause the last-mentioned document to be an exempt document by virtue of section 33 or subsection 37(1). (2) Where a request relates to a document that is, or if it existed would be, of a kind referred to in subsection (1), the agency or Minister dealing with the request may give notice in writing to the applicant that the agency or the Minister, as the case may be, neither confirms nor denies the existence, as a document of the agency or an official document of the Minister, of such a document but that, assuming the existence of such a document, it would be an exempt document under section 33 or subsection 37(1) and, where such a notice is given: (a) section 26 applies as if the decision to give such a notice were a decision referred to in that section; and (b) the decision shall, for the purposes of Part VI, be deemed to be a decision refusing to grant access to the document in accordance with the request for the reason that the document would, if it existed, be an exempt document under section 33 or subsection 37(1), as the case may be. National Security Considerations Documents 1 to 8 & 10 34. NBN Co sought the AGDs advice in relation to relevant documents within the scope of this application as outlined in the Schedule of Documents (found at the end of this Statement of Reasons). 35. After a consultation process, the AGD advised NBN Co that it objected to the release of Documents 1 to 8 and relevant parts of Document 10 on the basis of section 33(1)(a)(i) of the FOI Act. For reference, NBN Co provided the AGD with extracts from NBN Co Board Minutes, containing references to relevant security concerns in relation to Huawei. In particular, the AGD advised NBN Co that the disclosure of these documents could reasonably be expected to cause damage to the security of the Commonwealth. The relevant section of the FOI Act reads as follows:

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Documents affecting national security, defence or international relations 33) A document is an exempt document if disclosure of the document under this Act: (a) would, or could reasonably be expected to, cause damage to: (i) the security of the Commonwealth; (ii) the defence of the Commonwealth; or (iii) the international relations of the Commonwealth; or (b) would divulge any information or matter communicated in confidence by or on behalf of a foreign government, an authority of a foreign government or an international organization to the Government of the Commonwealth, to an authority of the Commonwealth or to a person receiving the communication on behalf of the Commonwealth or of an authority of the Commonwealth. 36. While Commonwealth agencies and other entities may object to the potential release of documents, they are not binding on an FOI decision-maker. Subject to any rights of appeal or review by objecting parties, it is the responsibility of an FOI decision-maker to make an access determination based upon a review of the relevant documents, their context, advice from subject matter experts and his or her interpretation of the Act. 37. Due to the nature of the exemption claimed (national security), it is not possible to provide specific details regarding the content of Documents 1 to 8 and relevant parts of Document 10. If I were to do so, it would tend to reveal exempt information, as per section 26(2) of the FOI Act, as detailed above. 38. In making my access decision, I considered the following matters: The AGD provided advice from its subject matter experts, whose expertise includes national security, defence and international relations. In making an assessment, it would be open to the AGD or other relevant Commonwealth Government entities to take into account the context of each document and whether the information could, in combination with other known information, contribute to or result in causing damage to the security of the Commonwealth. This is known as the mosaic theory and is referenced at paragraphs 5.335.34 of the OAIC FOI Guidelines. Based upon a review of the relevant documents, AGD staff advised that there was a reasonable expectation that the disclosure of Documents 1 to 8 & relevant parts of Document 10 could result in harm to national security. The AGD also objected to the inclusion of dates and certain details regarding Documents 1 to 8 & 10 in NBN Cos Schedule of Documents. In the AGDs opinion, those details also fell within the meaning of section 33(1)(a)(i) of the FOI Act. As such, that agency objected to their release based upon section 26(2) of the FOI Act.

39. Based upon the above points and the advice from the AGD, it is my opinion that Documents 1-8, relevant parts of Document 10 and detailed references to the Board Minutes in the Schedule of Documents are exempt from release under section 33 of the FOI Act. As such, access to these documents (and related information) is denied. There may be additional grounds upon which the above mentioned documents may be considered exempt from release. However, I will not review those grounds in light of the national security considerations, except in relation to parts of Document 10, which were not the subject of a national security exemption claim.

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Commercial Activities Document 9 & Part of Document 10 40. As outlined above, Document 9 and relevant parts of Document 10 were not the subject of exemption claims by the AGD. As such, I will consider whether these documents fall within the meaning of commercial activities, defined above. For ease of reference, I will refer to the relevant parts of Document 10 as Document 10 Excluding National Security Matters (Document10-ENSM). 41. The FOI Commissioner, Dr. James Popple, considered the phrase commercial activities in relation to NBN Co in the OAICs decision, Internode Pty Ltd and NBN Co Ltd [2012] AICmr 4 (the Internode Decision). In that matter, the FOI Commissioner held that NBN Cos Definitive Agreements with Telstra (the Telstra Deal) fell within the terms of section 7(3A) of the FOI Act for a variety of reasons, key among which is that NBN Co will draw a financial benefit from the DAs, which are valued at in excess of $9 billion. The DAs also translated financial heads of agreement with Telstra into binding legal agreements that will govern NBN Cos use of Telstra's infrastructure as well as the decommissioning of some of Telstra's network capability during the networks rollout. 42. In the Internode Decision, the FOI Commissioner reviewed two key cases dealing with commercial activities provisions analogous to those governing NBN Co. In particular, those cases were Bell v Commonwealth Scientific and Industrial Research Organisation [2008] FCAFC 40 (the CSIRO Decision) and Johnston and Australian Postal Corporation [2006] AATA 144 (the Aus Post Decision). Drawing from the CSIRO Decision, the FOI Commissioner quoted the Federal Courts holding that: ...activities are conducted on a commercial basis if they are related to, engaged in or used for commerce. That decision also referred to: ...the importance of the whole of the circumstances including the commercial goal (profit making or the generation of income or return) in determining whether particular activities are sufficiently related to commerce to be characterised as commercial activities (Underlined emphasis added). 43. In the Aus Post Decision, the Commonwealth Administrative Appeal Tribunal (the AAT) considered various dictionary definitions and concluded that commercial activity: ...can be regarded as a business venture with a profit-making objective and, strictly speaking, will involve activity to generate trade and sales with a view to profit. This is particularly so when the volume of activity is on a large scale. 44. While the AusPost and CSIRO decisions are instructive, it is important to note that NBN Cos section 7(3A) exemption is arguably broader in scope than those of Australia Post and the CSIRO. For reference, the general exemptions relating to those Commonwealth entities contain a competitive element and only exclude documents relating to commercial activities in competition with private entities. As NBN Cos general exemption does not contain a similar competitive element, it can be read as broader in scope. 45. Regardless of the scope of NBN Cos general exemption, it is clear that NBN Cos operations are focused on the goal of making a profit. This is made clear in NBN Cos Shareholder Ministers Statement of Expectations, found at the following link:http://www.dbcde.gov.au/__data/assets/pdf_file/0003/132069/Statement_of_Expectations.pdf. Among other matters, the Statement of Expectations outlines the Shareholder Ministers and the Commonwealth Government's vision for NBN Co and that:

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The company should operate as a commercial entity; At an appropriate time, NBN Co will raise debt on its own behalf; During rollout, the Government will provide equity funding, so as to provide NBN Co and the market with the certainty required to enter into long-term commercial contracts; During rollout, the Government will also retain full ownership of NBN Co in order to achieve its policy objectives, but with the intention to privatise the company once the Minister for Broadband, Communications and the Digital Economy declares the network to be built and fully operational, among other conditions precedent; NBN Co should continue to conduct its planning and the execution of its strategy in a publicly transparent manner, subject to any requirements for commercial confidentiality, and reflect this in its annual reporting As a GBE, NBN Co is subject to the Governance Arrangements for Commonwealth Government Business Enterprises (June 1997) (GBE Guidelines), which may be found at the following link: http://www.finance.gov.au/publications/governance-arrangements/index.html#Part4 In the Mandate and Objectives section, the GBE Guidelines provide that the principal objective for a GBE is to add to shareholder value. To achieve this objective, GBEs are required to operate efficiently, at minimum cost for a given scale and quality of outputs; price efficiently; and earn at least a commercial rate of return; and GBEs are to work towards a financial target and a dividend policy, agreed in advance with the Shareholder Ministers. Financial targets are to be set on the basis that each GBE should be required to earn commercial returns at least sufficient to justify the long-term retention of assets in the business and to pay commercial dividends from those returns.

46. It is clear that NBN Co operates as a commercial entity within a GBE context. However, the commercial nature of individual NBN Co documents must be judged on a case-by-case basis and (drawing from the CSIRO decision) in the whole of the circumstances. However, I am not required to provide details regarding Documents 9 & 10ENSM, if that would tend to reveal potentially exempt information (per section 26(2) of the FOI Act). In the following, I have tried to balance the need to provide details regarding these documents without revealing potentially exempt information. 47. As mentioned above, the DBCDE provided NBN Co with a series of objections to the release of Document 9, based upon sections 7(3A), 47, 47G of the FOI Act, all of which relate to commercial issues. In particular, the DBCDE made contentions that this document gave indications as to NBN Cos negotiation strategy regarding the companys Gigabit Passive Optical Network (GPON) procurement processes. In summary, the DBCDE also contended that the potential release of Document 9 could have a significant and adverse impact on NBN Cos ability to go to market in the future in relation to GPON tenders. The same argument applies to non-GPON tender bids, as the potential release of Document 9 could reveal NBN Cos general tender and negotiating strategy. 48. In my own review of Documents 9 & 10-ENSM, I also came to the conclusion that both those documents contain information relating to Huaweis tendering efforts and NBN Cos assessment of those tendering efforts. Considering that NBN Co committed to an initial, fixed purchase of $70m and has the option to buy up to approximately $1.5b worth of GPON and Ethernet aggregation equipment, the release of strategic information regarding successful or unsuccessful tenderers could have adverse implications for this transaction and future deals. This would, almost certainly, have a negative impact on NBN Cos ability to operate as a commercial entity and obtain value-for-taxpayers money. In particular, if NBN Co were to release this sort of information, it could: Signal to the market what was required to gain an advantage in an NBN Co tender, thereby skewing the competitive nature of the bidding process;

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Establish a base line or minimal entry point for bidders; Undermine NBN Cos efforts to solicit best practice in bids, quality service and optimal price points; Be used by players within the telecommunications or construction industries to gain an advantage in their dealings with their own competitors or with NBN Co; Reveal potential security concerns to the wider community. While this is not directly a commercial issue, any effort to fill security gaps could have an impact on NBN Cos commercial dealings and bring with it additional costs.

49. Drawing from the above points and the objections provided by the DBCDE, it is my opinion that Documents 9 & 10-ENSM fall within the meaning of NBN Cos commercial activities as per section 7(3A) of the FOI Act. As such, they are not subject to the operation of the FOI Act. In the event that I am incorrect in my above decision, there are other grounds upon which these documents may be exempt from release, as outlined below. General Exemptions (Commercially Valuable Information) 50. Section 47 of the FOI Act exempts documents from release if they would disclose trade secrets or commercially valuable information. The relevant section of the FOI Act reads as follows: Trade Secrets or Commercially Valuable Information 47(1) A document is an exempt document if its disclosure under this Act would disclose: (b) any other information having a commercial value that would be, or could reasonably be expected to be, destroyed or diminished if the information were disclosed. 51. Drawing from the points made in relation to NBN Cos commercial activities (s. 7(3A) exemption, it is my opinion that Documents 9 & 10-ENSM would also fall within the meaning of section 47(1) of the FOI Act. 52. In addition, section 11C of the FOI Act requires NBN Co to publish any documents, released pursuant to an FOI applicant, in the companys Disclosure Log, found at http://nbnco.com.au/about-us/freedom-ofinformation/disclosure-log.html. If NBN Co were required to release its internal review of tender bids, it could identify potential competitive advantages, weaknesses or other valuable information about a companys products or services. It could also make companies reticent to lodge tender bids with NBN Co. Such information could have negative implications for suppliers, their corporate imaging and brands. Moreover, NBN Cos ability to go to market would be undermined, particularly if fewer companies or businesses were to come forward with bids. More generally, the inability of NBN Co to keep its assessments and commercial intelligence out of the public domain could have an adverse impact upon the companys standing in the business community. This could have a very negative impact on NBN Cos ability to source products and services at competitive, market rates, with a consequential, negative impact to its taxpayer funded budget. 53. Drawing from the above points and the objections provided by the DBCDE, it is my opinion that Documents 9 & 10-ENSM fall within the meaning of section 47 of the FOI Act. If released, these documents contain commercially valuable information, which could be destroyed or diminished, if disclosed. As such, they are exempt from release. In the event that I am incorrect in my above decision, there are other grounds upon which these documents may be exempt from release, as outlined below.

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Conditional Exemptions (Deliberative Processes) Documents 9 & 10 54. As outlined above, NBN Co received advice from the DBCDE and that agency provided objections to the release of Document 9 under section 47C of the FOI Act. I have accepted, in a large measure, the DBCDEs objections, which form part of my reasons below. For reference, section 47C of the Act conditionally exempts documents from release if they would disclose a deliberative process of an agency or prescribed authority. The relevant section of the FOI Act reads as follows: Public interest conditional exemptions--deliberative processes 47C(1) A document is conditionally exempt if its disclosure under this Act would disclose matter (deliberative matter) in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of: (a) an agency... 55. In addition to the DBCDEs objections, it is my opinion that both Documents 9 & 10-ENSM contain deliberative matters for the following reasons: They contain opinions, advice and recommendations prepared for the DBCDE and NBN Cos CEO for the purpose of briefing the Minister, the Government and NBN Cos Executive and Board with respect to the potential exclusion of Huawei from participating in tender bids to NBN Co. The advice contained in these documents will have a bearing on the Minister and/or the Governments future decisions and policies in relation to NBN Cos general procurement strategy, as well as the companys current and future planning processes. These documents contain information regarding consultations and deliberations that have taken place for the purposes of informing Ministerial and Government decision-making processes. Documents 9 & 10-ENSM contain information in respect of the ongoing management of policy issues surrounding the NBN rollout. This includes the management of tender processes and ongoing security concerns, among other matters. It is clear that these are live issues that the company will need to manage throughout the life of NBNs rollout.

56. There are relevant exceptions to the above conditional exemption. In particular, sections 47C (2) and (3) of the FOI Act exclude operational information, purely factual material or reports including records of decisions from the meaning of a deliberative matter. While I cannot provide specific details, I can confirm that Documents 9 & 10ENSM contain a mixture of factual and deliberative information. In my view, it is not possible, nor is it practical to separate the factual material from other information without revealing the deliberations in question. 57. Drawing from the notes in section 47C of the FOI Act, access must generally be given to a conditionally exempt document, unless it would be contrary to the public interest. As per note 2 in section 11A of the FOI Act, a conditionally exempt document would be exempt, if providing access to the document would, on balance, be contrary to the public interest. 58. For the purpose of working out whether access to a conditionally exempt document would be contrary to the public interest, decision-makers are required to consider the public interest exemption factors outlined at section 11B of the FOI Act. That section details the factors favouring release (ss.3), irrelevant factors (ss.4) and a requirement to review the OAIC FOI Guidelines (ss.5).

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59. In applying the public interest test, I reviewed the OAIC FOI Guidelines and noted the following factors favouring disclosure, including: Promoting the objects of the FOI, as well as: increasing public participation in Government processes, with a view to promoting betterinformed decision-making. increasing scrutiny, discussion, comment and review of the Government's activities. increasing recognition that information held by the Government is to be managed for public purposes, and is a national resource.

Informing debate on matters of public importance; and Promoting effective oversight of public expenditure.

60. Drawing from the above points, I note that there is a strong public interest in matters relating to NBN Co. This is due, in part, to the sheer size of the project. When completed, the NBN will be one of the single largest infrastructure projects in Australian history. In addition, the project is truly national in scope, with plans to provide super fast internet access across the country, including some of Australias most remote regions. While NBN Co will eventually raise its own debt and obtain other market financing, the project is at present principally funded by the Commonwealth Government. It follows that there is a strong public interest in how NBN Co is managed and that there is effective oversight of the project. 61. In addition, I note that the OAIC FOI Guidelines (at paragraph 6.77) indicate that certain factors are not consistent with the objects clause of the FOI Act (s. 3) and the public interest factors favouring disclosure, outlined above, being s. 11B(3). Those inconsistent factors are a) disclosure of policy development; and b) inhibition of frankness and candour. In addition, the FOI Act specifically precludes a decision-maker from taking into account factors such as embarrassment, misunderstanding, seniority or confusion in applying the public interest test. In making my decision, I can confirm that I did not take any of those factors into consideration. 62. Furthermore, the section 47C conditional exemption only requires that an agency determine that a given document is deliberative. As outlined above, it is clear that Documents 9 & 10-ENSM contain deliberative matters. Unlike other conditional exemptions, there is no requirement that harm may result from the potential disclosure of a document. However, the OAIC FOI Guidelines indicate that it may be relevant to consider the issue of harm in the context of the public interest test, required by the section 47C conditional exemption. 63. As to potential harm related to disclosure, I took into account the following factors when making my decision: To date, the Government has not publicly disclosed specific reasons as to why it excluded Huawei from participating in tender bids to NBN Co. As such, the Governments and NBN Cos deliberative processes have not yet been finalised. As such, the release of Documents 9 & 10-ENSM through FOI processes could have the effect of undermining the Minister and the Governments current policy position/s. It could also have the effect of revealing NBN Cos current commercial position or strategy in relation to the GPON tender, which has an ongoing purchase component.

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The release of an interim or incomplete policy position (or one that suggests the possibility of a change of policy) could impact negatively upon NBN Cos current commercial dealings and its ability to negotiate effectively in the current market or in the future. The release of Documents 9 & 10-ENSM could negatively impact upon NBN Cos business planning processes and its ability to negotiate effectively with its staff, business partners and other stakeholders. This could also have a negative impact upon NBN Cos taxpayer funded budget and planning efforts and consequently on the public purse. The release of these documents could impact upon the Governments negotiations with stakeholders across the government, community and telecommunications sector.

64. On balance, I have come to the conclusion that the public interest factors against disclosure outweigh the factors favouring release. As such, I have determined to deny access to Documents 9 & 10-ENSM on the basis of section 47C of the FOI Act. 65. If you are dissatisfied with this decision, you have certain rights of review. Details regarding your rights of review and appeal are outlined in the covering letter, provided with this Statement of Reasons.

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Schedule of Documents NBN Co FOI Request FOI11/12-17

Doc No. 1 2 3 4 5 6 7 8 9 10

Description of document Board Paper Active Equipment Board Paper - Procurement of Optical Transmission Network Equipment Board Paper - Wireless Network and Procurement Strategy Board Meeting Minutes Meeting Number 46 Board Paper - Active Network Equipment (Aggregation equipment) procurement Board Paper - Active Equipment and Ethernet Aggregation And Transmission Board Paper - Procurement Approach For Passive Hardware Board Paper Procurement Of Active Network Equipment GPON Equipment Contracts Brief from NBN Co Head of Corporate to DBCDE Email from NBN Co Head of Corporate to CEO

Decision Access refused Access refused Access refused Access refused Access refused Access refused Access refused Access refused Access refused Access refused

Exemption S.33(1)(a) S.33(1)(a) S.33(1)(a) S.33(1)(a) S.33(1)(a) S.33(1)(a) S.33(1)(a) S.33(1)(a) S.7(3A), 47 and 47C S.7(3A), s33(1)(a), 47 and 47C

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