Turnbull outlines case: NBN costs to spiral

James Riley
Tuesday, 14 September 2010 21:02

IT Policy - Government Tech Policy

Rolling the National Broadband Network in from the regions rather than building out from city areas will require much more upfront capital from Government, driving up the cost of the network, freshly-minted Coalition communications spokesman Malcolm Turnbull says.

The Gillard Government had not been honest about the implications of promises made in negotiations with the rural independents that helped it form Government, Mr Turnbull said, and cost increases would have to be borne by taxpayers.

In a blog post shortly after being promoted to Tony Abbott's frontbench, Mr Turnbull set out the arguments he will bring to the portfolio:

The lack of a business case for the NBN;
The lack of transparency in developing the policy and implementation plan;
The certainty that the current plan is less valuable than its cost;
The argument that Labor has been proved incapable of delivering projects on time or on budget.

"What little we know of the economics of this network is sufficient to assure us that the NBN as currently conceived will destroy billions of dollars of taxpayers' money," Mr Turnbull said.

"In other words, the asset constructed for $43 billion will be worth a fraction of that amount."

Mr Turnbull says he comes to the portfolio more committed that anyone to ensuring that Australians get access to high speed internet. With a wealth of professional experience in the internet sector, he says that while the internet presents great opportunities, it also carries great risks.

"'Build it and they will come' is no substitute for rational financial analysis. A press release drafted on the back of a drink coaster is no substitute for a thorough business plan."

Mr Turnbull scoffed at the new era of "sunshine" talked about by Julia Gillard in her agreement with the rural independents, saying the lack of transparency in the policy development process was an attack on democracy.

"What price democracy, accountability, transparency or the new "sunshine" era of Federal Parliament if a $43 billion investment can be embarked on by Government without any financial analysis capable of demonstrating the money will be well spent?," he said.

While the new plan to roll the network in from the regions was good for some parts of Australia, it would be bad news for under-served outer metropolitan areas and would greatly increase the amount of capital that Government would need to commit to the NBN.

"Senator Conroy has not yet been honest with the Australian people about these financial implications for the NBN of Labor's negotiations with the independents.  He must do so now," Mr Turnbull said.

"We've already seen that this Labor Government is utterly incapable of delivering anything on time and on budget, or of spending the taxpayers' money efficiently. There is no reason to expect the NBN will be any different," he said.