Michael Sainsbury
June 14, 2016

The NBN's politics of good timing

Election 2016

The NBN's politics of good timing

Bill Shorten: Going hard or going home on NBN policy decisions

Three weeks before the election, Labor has unveiled its plan to give Australia a better National Broadband Network. Its timing is good, and its plans are superior to the Government’s.

And most importantly it will add next to no extra burden on the taxpayer.

This not a return to the original Labor plan that would have vaulted Australia into the 21st century with a statement of a rare intent from governments of all stripes that are frightened of national projects.

Labor’s NBN redux is a neat political balancing act: Between something that would give the government a guaranteed scare campaign about too much spending, and a strategy to force NBN Co to reverse course from ageing technologies and lower speeds.

In the process, it hands at least two million extra households the possibility of real fibre broadband.

Labor has committed to almost double the number of Australian homes that will receive future-proofed, gold-plated, fibre-to-the-home broadband services from 20 per cent to 39 per cent.

Importantly has confirmed it will also adds the latest fibre development, fibre to the driveway, into the Malcolm Turnbull-designed, National Broadband Network.

Labor claims it can do all this for a network budget increase of about 5 per cent, which given the way NBN costs have soared under MrTurnbull to deliver an inferior service, is a rounding error.

Mr Turnbull’s mistake was thinking you can scrimp on the future, in the same way that bankers can negotiate lower prices for assets.

There was no way Labor could ever have gone back to its original plan. Malcom Turnbull and Ziggy Switkowski, his now NBN Co chairman recast the company to make absolutely certain there was no turning back.

The introduction of new technologies meant NBN Co was forced to add expensive new national information technology systems to cope with provisioning and delivery on each separate technology.

These two extra systems brought additional costs that run into the many hundreds of millions and as high as a billions. As well, the lower speeds on offer meant the revenue line also took a hit, the workforce was changed and deals struck with new contractors.

But the stark truth is in the numbers: the LNP plan reduced the projects internal rate of return to under three per cent the cost of government borrowing. Malcolm Turnbull as a banker would advise his clients not to touch such a dog.

This is compared to the original, audited, Labor plan that returned 7 per cent. The good news for taxpayers is even Labor’s new plan will mean a return to 3.9 per cent IRR. Back in the black, as it were.

"We cannot pretend that the last three years hasn't happened," Opposition Leader Bill Shorten said this week.

"Wwe are not going to do what right-wing Liberal governments always do if and when they get elected, and try and unpick everything the previous government’s done,” Mr Shorten said.

"Australians are sick of political parties resetting the clock back at zero and starting again from the very start."

This last line is important a represents the best step in Mr Shorten’s re-making as a viable PM.

 

The obfuscation lies, half-truths and flat out lack of disclosure by an increasingly arrogant NBN Co have been, constant and pathetic. You would think that a taxpayer-owned company, especially an effective monopoly on wholesale broadband, should be more transparent

But aided and abetted by News Corporation press, NBN Co’s its mixed technology network (MTM) – which we at InnovationAus.com like to call the Malcolm Turnbull mix – has been talked up as brilliant solution to counter Labor’s folly, despite turning back the clock and punching a gaping hole in his innovation plans,

News' editorial masters on the fifth floor of Holt Street have had a financial imperative to aid and abet the government’s plan in order to protect Foxtel their golden goose pay TV monopoly – and the company propping up Rupert Murdoch’s News Corporation following the move to split from 21st Century Fox.

In terms of the election timetable, it’s a smart move by Labor to wait until the real election campaign began. Most Australian election campaigns come at between three and four weeks, and broadband ran the danger of being lost in the post-Budget arguments about whose deficit black hole is biggest. Is anybody still listening?

Make no mistake, broadband is a definitely an election issue. Perhaps it is not in the very top-tier nationwide but certainly very relevant in electorates where people are angry about the broadband speeds.

Labor has found a clever, politically-savvy way to use its NBN upgrade.

It will leave the Optus and Telstra HFC networks in place for the NBN, those networks are in the centre of five state capitals with Hobart missing out. But it has promised to review this once in office.

For now, Labor increased fibre rollouts will occur on the cities edges and in regional Australia and that’s marginal seat land. These are the same people who have screamed loudly about poor broadband service, so expect campaigns targeted seat-by-seat where voters presently consigned to Turnbull’s ADSL dustbin of history.

Such issues can tip marginal seats.

You can bet Tamworth will also be getting fibre, handing Tony Windsor – who has long campaigned for better bush telecoms – a tasty piece of leverage over Barnaby “25Mbps is enough” Joyce. Labor will almost certainly preference Mr Windsor. On current polls, this puts the Deputy PM on a knife edge.

So Labor has done the best they think they can with a shit sandwich prepared by the PM and Dr Switkowski (a decent man who appears to have been beguiled by chance, once more, to control Australia’s telecoms destiny).

Simply, on the evidence of this policy it seems that Labor and not the Coalition has a plan for Australia’s future.

As Mr Turnbull explained perhaps too eloquently in the moments after he took the leadership from Tony Abbott:

“The Australia of the future has to be a nation that is agile, that is innovative, that is creative. We can’t be defensive; we can’t future-proof ourselves,” Mr Turnbull said.

“We have to recognize that the disruption that we see driven by technology, the volatility in change is our friend if we are agile and smart enough to take advantage of it.”

Well, Malcom, that is going to be very hard with a broadband network that will be one of the worst in the developed world. And as far as ‘future proofing’ is concerned, fibre-to-the-home or driveway infrastructure gives Australia the best chance.

 

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