Federal Government to waste 43 billion on NBN infrastructure?

In a move reminiscent of the NSW Government’s tactics of up-announcing major projects before they are cancelled, the Rudd government has announced it will increase spending on the national broadband network (NBN) almost tenfold to AUD 43 billion.
 
NSW’s weary electors are used to long-awaited, important infrastructure projects being replaced by grandiose, hyper-expensive, obviously inappropriate schemes that are cancelled almost as soon as they are announced, but not before millions are spent on pointless studies, reports and advertising – take Sydney’s north-west Metro, for example.
 
So it will be with some cynicism that many Australians listen to Mr Rudd’s upbeat announcement of the cancellation of the current NBN tender, and the announcement of a new program in which the government, with some private sector involvement, will form a company with a budget of $43 billion to build the network.
 
The $43 billion will be funded by borrowing, which places into doubt the federal government’s ability to finance other infrastructure projects already announced, especially in the road and rail transport sectors.
 
The announcement has been received with some incredulity by most commentators. In the Business Spectator, Stephen Bartholomeusz writes: “The much vaunted, lengthy, controversial NBN tender produced what? Nothing, actually.
 
“The NBN is, therefore, dead. However, announcing the complete and abject failure of a core election promise – the nation-building project that was supposed to carry the country into a high-speed broadband future – wouldn’t have been a good look for the government, given the importance it had assigned it.
 
"So, in a masterstroke of spin, Rudd and Conroy not only raised the NBN from the dead but also made it so much bigger, and grander and more ambitious – and more expensive – than its original form. The NBN is dead, long live the (new) NBN!
 
“Instead of the $4.7 billion taxpayer contribution to a private sector-owned and operated fibre-to-the-node network, taxpayers will instead spend up to $43 billion building a national fibre-to-the-premises network. Private sector contributions to the New NBN’s financing will be welcomed and, in a decade and a half, New NBN will be sold to the private sector. A T4, if you like,” he writes.
 
The leader of the Nationals Warren Truss is also questioning the benefits of the ‘New NBN’.
 
“The government was told repeatedly, before the 2007 election and afterwards, that its broadband policy would not work and hundreds of thousands of Australians living outside the capital cities would be bypassed,” Mr Truss said.
 
“Labor did not listen and has wasted 18 months trying to re-design a Coalition plan that would have seen fast broadband delivered everywhere around Australia in 2009, not 2017 as under the Rudd Government’s new plan.
 
“The Coalition signed off on $958 million for the Opel contract to provide fast broadband to regional Australia, and put another $2.4 billion into the Communications Fund to future-proof those services and provide further upgrades. In metropolitan areas where there is strong competition, existing commercial providers were willing to build the fast broadband network," Mr Truss said.
 
While many technology commentators have welcomed the plan, its long timeframe means that by the time the network is rolled out in around eight years’ time, communications technology may have overtaken it and made the same speeds possible on current copper-to-the-premises wiring (currently fibre-optic cables only run between exchanges, or nodes, not to homes and businesses).
 
Another concern is that the uptake of wireless broadband, which is running at six times of wired connections, means that there will not be a sufficient number of subscribers taking it up to make the roll-out financially viable.
 
From a transport and logistics perspective, the industry will be anxiously watching if today’s $43 billion NBN announcement will be followed by any cuts to spending on transport (and other) infrastructure.
 
That is, unless the next announcement will be cancelling the NBN altogether, a la NSW Metro.
 

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