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PM’s push for fast internet slowed by credibility gap

4 December 2010 1,392 views One Comment


Julia Gillard

Julia Gillard during the debate over the NBN bill in parliament this week. Picture: Ray Strange Source: The Australian

Julia Gillard has not learned from her predecessor’s flawed approach to big issues

ACCORDING to some political observers, Julia Gillard’s spirited defence of the National Broadband Network in the last sitting week of federal parliament was evidence she was regaining her shattered confidence after the recent election.

Or, as some put it, she was getting her mojo back.

However, reports of her revival and survival are likely to be premature, given she has pinned her reform credentials on the success of the NBN in delivering significant productivity benefits for the nation.

With each passing day of the NBN rollout, the Australian public will become more suspicious of Gillard’s “trust me” response to legitimate questioning over whether the NBN is the most cost-effective means of delivering universal and affordable broadband.

Her stubborn refusal to release the 400-page NBN business case, which reached farcical levels until she caved in to pressure from independent senator Nick Xenophon to release a sanitised 50-page summary, left people wondering what she had to hide.

The Prime Minister’s refusal to submit the NBN to a full cost-benefit analysis is becoming increasingly difficult to justify.

It is the single largest and arguably the most complex infrastructure project proposed by an Australian government, with somewhere between $35.7 billion and $50bn of taxpayers’ funds at risk, depending on whose assumptions you can believe.

Gillard’s claim that there has been sufficient scrutiny of the NBN was undermined by Reserve Bank governor Glenn Stevens when he testified last week before a parliamentary committee. While it was appropriate, Stevens said, for government to sometimes use its resources to fund large projects if the private sector was unwilling or unable to undertake the investment, there should be “a proper cost-benefit analysis of that case in those instances”.

Similar views have been expressed by Treasury and Infrastructure Australia.

Given Labor’s demonstrated incapacity to implement government programs without disastrous consequences (think of the home-insulation debacle and the rorted and wasteful school halls program), why should the public trust Gillard to roll out the NBN when she has gone to inordinate lengths to suppress relevant information and avoid scrutiny?

Like a used-car dealer with a history of foisting lemons on to unsuspecting buyers, Gillard is expecting the public to be conned yet again into believing her government can be trusted to deliver. The con includes the ridicule she heaps on those who raise concerns or question the assumptions behind the NBN, just as she did when question were raised about the school halls program.

This is a Labor template. Kevin Rudd’s default setting over his carbon pollution reduction scheme was to dismiss anyone who did not share his obsession with climate change as a “denier” or “sceptic” with the command that they should get out of his way.

Similarly, Gillard labels those who raise concerns about the NBN as “Luddites” standing in the way of nation-building and directs them to get out of her way.

It seems she will have to learn the hard way that scorn, vituperation and vilification are counterproductive.

Rudd learned that to his cost after the failed Copenhagen climate change conference.

The contempt with which the Prime Minister responded to a question in parliament about a Kiama resident seeking a guarantee that the government will make good any damage to her property caused by the roll-out, was not just a bad look, it was plain dumb.

The commitment to universal high-speed broadband is not Labor’s alone. The Coalition subscribes to the same ideals, but rightly questions not only the multi-billion-dollar infrastructure cost to taxpayers but also the creation of a government monopoly in telecommunications, the lack of competition to drive down prices, the focus on only one technology, the likely domestic take-up and the productivity benefits.

In a speech in September, the Prime Minister said “broadband will be to the 21st century what the railways were to the 19th”. That comparison may be valid given railways opened up vast new geographical areas for agricultural development, mining and increased populations.

However, the railway analogy is more applicable to Rudd’s much more modest original broadband proposal.

Labor’s 2007 election promise was to spend just more than $4bn upgrading the internet “backbone” with optical fibre; in other words, to improve the speed to the nodes that distribute the internet connections to homes. The present NBN model of fibre to the home came into being only after the Labor government botched the original tender process.

As Communications Minister Stephen Conroy said in 2007, “We are not proposing fibre to the home . . . there is no point building something people cannot afford to use.”

The government is effectively proposing to build a rail track to each home in the nation, rather than to stations centrally located in suburbs and towns. No wonder Labor is resisting a cost-benefit analysis.

We can safely assume the cost-benefit of a rail track to each home would never stack up, given such a network would never be constructed.

The public has every reason to be wary of Labor’s timetable for building the NBN, as detailed in the NBN implementation study, and whether the government can possibly deliver on its promises.

The timetable of eight years for construction of the NBN means connecting about 10.7 million existing premises and an additional 1.3 million anticipated to be built by 2018.

Simple arithmetic reveals the government must connect 1.5 million homes a year, or a staggering 28,846 homes a week, or 4120 homes a day — that’s every day in every week of every year for the next eight years.

Any obstacle, including the weather, means construction time could blow out by months or years, with an associated blow-out in costs. This will come as no surprise, if or when this eventuates, given the government’s track record of incompetent management and delivery of its supposedly showcase programs.

The Prime Minister will also have us believe there will be no viable competing technologies during the next eight years. However, the fastest growth in broadband uptake in Australia in recent times has been in wireless technology.

Reports from Hong Kong reveal its residents will soon have access to a long-term evolution wireless network that will operate at speeds of up to 100 megabits per second, as proposed for the NBN. LTE networks are reportedly operating in parts of Europe and the US, with construction under way in Japan.

The first satellite dedicated to delivering broadband at up to 10Mbps was recently launched by a European company, with advanced plans for other satellites providing broadband services to be launched in coming months.

Gillard’s faith in the “build it and they will come” school of economics also took a battering this week when Malcolm Turnbull drew attention to a paper by communications experts Robert and Charles Kenny, who questioned whether the claimed benefits of fibre to the home were real and justified heavy government subsidy. It seems no one has explained why every home in Australia must be connected to 100Mbps, given most of the promised benefits in e-health and online education can be delivered by existing technologies and to commercial, not domestic, buildings.

The Kenny brothers do not argue against rolling out fibre but state: “We do believe that those benefits have been grossly overstated and that therefore, particularly in a time of tight budgets, governments should think very hard indeed before spending billions to support fibre roll-out.”

It is a pity Gillard has a tin ear to such sensible advice.

The Weekend Australian

December 4 -5, 2010

One Comment »

  • Damon said:

    Great article, highlighting there is no commercial logic behind the NBN, nor is this driven by votes…..this socialist agenda is being forced upon a society to serve a hidden agenda. This agenda is about controlling the electroate, via Internet filters and smart meters (Energy use)which will be mandatory attached to these services. Welcome to the police state where your every move will be watched.