Academic journal article Agenda: A Journal of Policy Analysis and Reform

Australia's NBN: Come Hell or High Water

Academic journal article Agenda: A Journal of Policy Analysis and Reform

Australia's NBN: Come Hell or High Water

Article excerpt

Are there projects of such self-evident value that they ought to be exempt from even the most rudimentary cost-benefit analysis? Seemingly so, according to the former Finance Minister Lindsay Tanner, as long as it's the National Broadband Network (NBN). In May 2009, a month after Kevin Rudd had announced the $43 billion project, when asked about the absence of a cost-benefit analysis (CBA), Tanner said: 'We had to make the clear decision that said this is the outcome we are going to achieve come hell or high water because it is of fundamental importance to the future of the Australian economy' (quoted in Martin 2010).

A year later, Tanner remained unmoved by Opposition calls for a CBA and he dismissed such analysis as subjective because 'cost-benefit analyses of the orthodox kind are basically captives to the assumptions you feed in' (Martin 2010).

Stephen Conroy, the Broadband Minister, was similarly dismissive. When pressed in May 2009 about the lack of a CBA, he told opposition spokesman Senator Nick Minchin, 'As I have repeatedly stated, this is an election commitment and we intend to deliver it.' (Senate Hansard 2009). The election commitment had actually been a $4.7 billion upgrade of the copper network which also had not been subject to a CBA. Clearly, for Conroy, election promises don't have to be evaluated, even when they have morphed from a $4.7 billion upgrade using 'fibre to the node technology' (FTTN) into a $43 billion 'fibre to the home' (FTTH) network.

Conroy's lack of interest was perhaps understandable. Had the $43 billion project been subject to a CBA, his failed $4.7 billion policy may have come under renewed scrutiny. Under that initial policy, the government had tendered out the right to upgrade the Telstra copper network. Given that Telstra had not agreed that anyone else could upgrade its network and the government had not offered compensation to secure that right, the tender collapsed when Telstra was dismissed from the bidding in late 2008. No doubt FTTN, the most commonly deployed technology to deliver high-speed broadband, which uses fibre to a street corner cabinet, would have been revisited in a CBA.

Tanner's readiness to dismiss the need for a CBA was, though, less understandable. The Department of Finance is the custodian of CBA practice and has a lead role in reviewing projects. Finance maintains the Handbook of Cost-Benefit Analysis that governs the evaluation of new projects and its Office of Best Regulatory Practice sets out the processes by which new legislation should be evaluated, including cost-benefit analysis.

Also the project had obvious implications for the budget. Under the Public Private Partnership model that was initially proposed, the Commonwealth's 50 per cent commitment would have been $11 billion in equity and a guarantee on $10.5 billion in debt.

Nor can Tanner's lack of interest be reconciled with his complaints about the lack of serious policy debate. Mr Tanner believes that politics has been dumbed down and that few are interested in detailed policy debates. On releasing his book Sideshow: Dumbing Down Democracy in April 2011, Tanner said: 'I would always try to put the focus on the merits of the issue ... but at times I felt overwhelmed. I sometimes felt like I was talking a foreign language' (Australian Broadcasting Corporation 2011).

In relation to the NBN, whatever language he was speaking it wasn't the language of CBAs. Indeed, there was an unspoken subtext which Tanner acknowledged in 2011. In his reflections on his time as a 'reformist minister', Tanner said the NBN was really about 'getting the market structure right', an objective he and Broadband Minister Stephen Conroy had 'pursued relentlessly over seven years' (Tanner 2011). That meant the structural separation of Telstra. The PM, Julia Gillard, claimed this was the 'Holy Grail' of telecommunications reform which would lead to significant benefits from heightened competition and finally deliver on Professor Fred Hilmer's 1993 competition policy reforms. …

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