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Monday, 15 November 2010
Page: 2402


Mr TUDGE (6:49 PM) —The purpose of the National Broadband Network Financial Transparency Bill 2010 is twofold: the first is to require the publication of a 10-year business case for NBN Co. and the second is to refer the NBN project to the Productivity Commission for a thorough cost-benefit analysis. I find it astounding that we actually have to put a bill to the parliament to pressure the government to do this. Doing a business case and undertaking a cost-benefit analysis should be a basic requirement for any serious government infrastructure investment. In this case we are not just talking about a small investment. We are not talking about a couple of thousand dollars or even a couple of million dollars; we are talking about the largest public investment in Australia’s history—a $43 billion project. That is $5,000 per household, and all of it, of course, on borrowed money. Surely such a massive outlay deserves scrutiny. Surely it deserves a rigorous cost-benefit analysis.

The government has repeatedly justified the enormous cost of the NBN project on the basis of its large contribution to the economy. We have just heard that here. Yet they have provided neither any tangible evidence nor any concrete examples to support that claim. Most of the applications and uses for the NBN that actually add to economic productivity are available over today’s ADSL2+ broadband speeds.

The McKinsey-KPMG implementation study did not offer the financial analysis necessary for such a large-scale project. It did not attempt a cost-benefit analysis or consider any other alternatives. Over $25 million was spent on that study, but the government did not require it to answer the most important question: is a $43 billion fibre-to-the-home network the most cost-effective way of achieving universal access to affordable broadband in Australia?

It is not just the opposition that is calling for a cost-benefit analysis and the assumptions underpinning the business case to be revealed. Many other respected commentators are also doing this. For example, the ANZ chairman said:

The lack of a business case and full publicity of that business case is throwing a lot of doubt in people’s minds about the level of expenditure.

The chairman of Wesfarmers said:

I am not convinced and feel it needs a cost-benefit analysis. I just don’t know if an NBN will rank in priority.

Even the Treasury Secretary, Dr Ken Henry, said that government spending that does not pass an appropriately defined cost-benefit test ‘necessarily detracts from Australia’s wellbeing’. Surely they should be listening to at least Dr Ken Henry in this regard, and I am not sure why they are not. Why is the government resisting commonsense, good financial practice and what is being called for by so many people? Senator Conroy has stated many reasons. He says it will be too costly, but it will not cost any additional government outlay if it is done by the Productivity Commission. He says it will take too long, but an analysis would take probably only six months and could be done in parallel with the existing operations. Finally he says that it cannot be done because it would just be too hard to do. Yes, it would be a difficult analysis, but it can be sensibly done, as the Productivity Commission itself has indicated.

The bottom line is that Minister Conroy has made every excuse that proponents put forward when they do not want their project subjected to scrutiny. This project is too large and too far reaching to avoid scrutiny. It needs the full scrutiny of the Productivity Commission. It needs a full, 10-year business case to be made publicly available. I commend the bill to the parliament.