Labor Slams NBN Cost-Benefit Report 1

Monday, September 1st, 2014
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The NBN cost-benefit analysis commissioned by Malcolm Turnbull has been attacked by the Opposition as politically motivated and tendentious.

The long-awaited NBN cost-benefit analysis commissioned by the Coalition government has reached the conclusion generally anticipated, coming out in favour of the multi-technology mix (MTM) model launched by Communications Minister Malcolm Turnbull while finding significant fault with Labor’s full fibre-to-the-premises (FTTP) solution.

According to the 196-page report, the FTTP solution supported by the Labor government would have involved greater cost yet produced a net negative benefit. Its analysis found that the FTTP plan would cost $17.6 billion, yet result in a benefit of minus $4.7 billion due to delays in the provision of high speed broadband services that a more comprehensive solution would entail.

By comparison, the Coalition’s MTM model will cost $7.2 billion in current dollars while yielding a benefit of $1 billion. Under the Coalition’s plan, a combination of fibre-to-the-premises and fibre-to-the-node installations will be employed in tandem with the existing copper network to deliver connection speeds of between 20 to 100 megabytes per second (Mbps) throughout the country.

The review found that average Australians are concerned not so much with enjoying astronomical connection speeds as they were with obtaining high-speed broadband sooner.

While the NBN was originally slated to provide speeds as high as 1000 Mbps, the review found that even a decade into the future, this rate would dwarf the connectivity needs of even the most data hungry households. It claims that by 2023 the average Australian household will require connection speeds of just 15 Mbps, with the top one per cent of households requiring 48 Mbps – a mere fraction of the rates promised by the original plan.

According to the review, the premium that Australian consumers will pay for quicker internet connections drops precipitously once speeds reach a reasonable threshold. While Australians would pay a further $1.50 per month for more Mbps while connection speeds are sluggish, this amount falls to 70 cents when speeds reach 50 Mpbs, and nothing past the 90 Mbps point.

Shadow Communications Minister Jason Clare has responded to the report by attacking the credibility of the independent panel, claiming that its impartial character had been seriously undermined by the appointment of staunch critics of the Labor government.

“This is not the independent cost-benefit analysis by Infrastructure Australia that Malcolm Turnbull promised,” said Clare. “He has hand-picked former staff and some of the most vociferous critics of the NBN.”

‘This includes well-known critics of the NBN Henry Ergas and Kevin Morgan, former adviser to Malcolm Turnbull.”

According to Clare, the report also fails to address the costs involved in maintaining and upgrading the copper and HFC networks required by the MTM solution.

“NBN Co has not yet gained access to the copper or HFC networks, and the cost of operating, maintaining and enhancing this network has not been revealed,” he said.

Greens spokesperson Scott Ludlam was even more scathing in his assessment of the report’s credibility, claiming that its “hand-picked team of NBN sceptics” had been enlisted to provide Turnbull with “exactly the report he wants.”

According to Ludlam, the report made use of shoddy methodology and employed figures which were “cooked.”

“Exactly how do you model the financial, non-financial, community, education or healthcare benefits of an enabling network like the NBN four decades into the future?” he said. “You make up a number. It’s actually not much more sophisticated than that.”

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  1. Joel Roberts

    Any truly independent cost-benefit anyalysis would have been done by Infrastructure Australia, not mere mates of the Abbott government.